Update: A statement in from Airtel:

Airtel Payments Bank is fully compliant with all guidelines and follows a stringent customer onboarding process. Airtel Payments Bank accounts are opened only after explicit consent from the customer. A separate consent for Direct Benefit Transfer is taken from all customers. As per the latest guidelines, DBT amounts are automatically credited to the most recent Aadhaar linked bank account of a customer. If the Airtel Payments Bank account is the latest Aadhaar linked account opened by a customer, the DBT automatically gets routed to it.   

Airtel Payments Bank customers are duly notified about the subsidy credit via SMS and an automated call (available in 12 languages) saying ‘The govt. subsidy of Rs X has been credited to your Airtel Payments Bank Account’ and also as and when any interest amount is credited. The balance in Airtel Payments Bank Savings accounts can be withdrawn by customers at any Airtel Store or transferred to any bank account. There are no charges on the first cash withdrawal in a month.

We continue to educate retailers and strengthen our processes to ensure transparency to customers and compliance with all regulations.”

Earlier today: The UIDAI has ordered an investigation against Bharti Airtel for opening Airtel Payments Bank accounts of customers while carrying out Aadhaar verification of their mobile numbers, reports the Times of India, citing anonymous sources. The UIDAI initially sent the company a showcase notice. The report also cites Ajay Bhushan Pandey, the CEO of UIDAI, as saying that an investigation has been ordered against ‘certain telecom companies’, but he hasn’t named the company in question.

A few things

1. Explicit Consent vs Informed Consent: We’ve written to Airtel for a comment, but the report cites a spokesperson as saying that a separate ‘explicit’ consent is taken before opening a Payments Bank account. That’s exactly what the company had said back in September, when the issue had first surfaced, saying

“Airtel Payments Bank is fully compliant with RBI & UIDAI guidelines and follows a stringent customer onboarding process. Airtel Payment Bank accounts are opened only after explicit consent from the customer . We will continue to educate retailers and strengthen our process to ensure transparency to customers and compliance with regulation,” the company said.

Therein lies the problem: the idea of explicit consent versus informed consent. As we found out in our discussions on Privacy, a tick-box approach to consent is broken, and the consent being taken isn’t really informed consent. People aren’t really aware of the implications of the consent that they’ve given to Airtel, and it probably hasn’t been explained to them in sufficient detail. Having terms and conditions and a tickbox just doesn’t work for users.

2. The other issue is about the pace of signing up: once the DoT, based on a misreading of the Supreme Court order for re-verification of mobile numbers, put a deadline for linking mobile numbers to Aadhaar numbers, it gave telecom operators an opportunity to do some “growth hacking”: opening up Payments Bank accounts while reverifying numbers. For customers, the fear that their numbers would be canceled if they didn’t link it to Aadhaar, and the massive scare-campaign for this from telecom operators to speed up signing up – meant that customers were rushed into it.

From June 9 this year till the end of October, over Rs 47 crore worth of LPG subsidy was credited to more than 2.3 million consumers’ Airtel Payments Bank accounts instead of their regular bank accounts, according to the National Payments Corporation of India (NPCI), as reported by ET. And many of them complained. Customers only realised the implications after they stopped getting their LPG subsidy, which was diverted to their Airtel Payments Bank accounts: this is not what they had given consent for.

The subsidy was diverted to the Payments Bank account because of a ridiculous rule that doesn’t require consent:

“as per subsidy transfer protocol, the LPG subsidy is transferred to the (latest) bank account of the beneficiary seeded with their Aadhaar.”

3. Growth in Airtel Payments Bank deposits:

Airtel said that it has around 20 million accounts and that the bank operation is seeing a throughput of Rs 1200 crore per month, in a recent earnings call.