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Government admits to some of the banking frauds through Aadhaar linkage

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To a starred question (158 – text provided below) regarding “Fraud in linkage of Aadhaar with bank accounts and SIM cards” by Sh. Husain Dalwai in the Rajya Sabha, the Finance minister, Mr. Arun Jaitley, has replied on January 2, 2018, that the Department has received 20 complaints of bank frauds involving Rs.7.65 lakhs connected with linking Aadhaar with bank accounts since 2015.

To another unstarred question (405 – text provided below), by Sh. Rupin Bora in the Rajya Sabha, regarding “Bank frauds using Aadhaar number”, The Minister of State in the Ministry of Finance, Sh. Shiv Pratap Shukla has replied on February 6, 2018, “As per data reported by Public Sector Banks (PSBs) there have been incidents of money being fraudulently withdrawn from bank accounts using the customers’ Aadhaar number in a few banks.” The details provided in the annex total to 141.7 lakh rupees been fraudulently withdrawn.

To a question (4181) on “Bank frauds using Aadhaar number” In the Lok Sabha, by Sh. Sanjay Haribhau Jadhav, the response by the Minister of State in the Ministry of Finance, Sh. Santosh Kumar Gangwar mentioned only two banks – the Andhra Bank with 4 complaints and Rs. 4,20,098 and the Syndicate Bank With 1 complaint and Rs. 1,21,500 defrauded.

It is unclear what the difference in the questions is to get such drastically different numbers in response.

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Neither of the questions includes the non-consensual linking of Aadhaar with Airtel Payments Bank, which led to the fraudulent rerouting of subsidies. Also, instances of theft of money reported in media don’t appear to have made it to government records. For example:

This is inexplicable if the government is claiming to report data provided by banks unless banks themselves are covering up such frauds, as was seen in one instance of a bank account being opened using falsified documents.

Every time numbers are provided in response to questions, the answers seem to change.


Rajya Sabha questions text reproduced here for the convenience of those who don’t know how to search Questions and Answers records from the Parliament.

STARRED QUESTION NO- 158

ANSWERED ON- 02.01.2018

Fraud in linkage of Aadhaar with bank accounts and SIM cards

158. Shri Husain Dalwai

  1. the details of complaints of bank frauds received where money was siphoned out in the name of linking Aadhaar with PAN/Bank Account/SIM card, since 2015, bank-wise, month-wise;
  2. whether any directives have been issued to banks to deal with such instances of bank fraud, if so, the details thereof, if not, the reasons therefor;
  3. whether a Grievance Redressal Mechanism has been put in place to deal with such instances, if so, the details thereof, if not, the reasons therefor; and
  4. the reasons due to which Government is mandating linkage of Aadhaar with bank accounts and SIM cards despite such incidents of misuse?

ANSWER by THE FINANCE MINISTER

(a) to (d): A Statement is laid on the Table of the House.

*****************

STATEMENT REFERRED TO IN REPLY TO PART (a) to (d) OF RAJYA SABHA STARRED QUESTION NO. 158* FOR 2NDJANUARY, 2018 REGARDING “FRAUD IN LINKAGE OF AADHAAR WITH BANK ACCOUNTS AND SIM CARDS” TABLED BY SHRI HUSAIN DALWAI.

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(a) and (b): The Department has received 20 complaints of bank frauds involving Rs.7.65 lakhs connected with linking Aadhaar with bank accounts since 2015,as per details at Annexure.However, for customer protection, zero liability of a customer is assured vide Reserve Bank of India’s (RBI)circular dated 6th July, 2017in all cases of a third party breach where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system and the customer notifies the bank within three working days of receiving the communication from the bank regarding the unauthorized transaction.On being notified by the customer, the bank shall credit (shadow reversal) the amount involved in the unauthorized electronic transaction to the customer’s account within ten working days from the date of such notification by the customer.
Further, the guidelines inter-alia addresses the following areas for safeguarding the customers while handling the cases of unauthorized electronic banking transactions:

I. Strengthening of systems and procedures
II. Reporting of unauthorised transactions by customers to banks
III. Limited liability of a customer
IV. Reversal timeline for zero liability/ limited liability of customer
V. Board approved policy for customer protection
VI. Burden of proof on banks
VII. Reporting and monitoring requirements
(c): The Banks have their grievance redressal policy and internal Grievance Redressal Mechanism for resolution of grievances and customer complaints displayed on their respective websites. In case of alleged unauthorised transactions, the case is investigated and settled as per the Standard Operating Procedures (SOP).

Out of 1.26 lakh overall grievances, 1.20 lakh have been disposed of during the period 1st January, 2017 to 28th December, 2017, leading to a settlement percentage of95%.

(d):In terms of amendments to provisions of Prevention of Money Laundering – (Maintenance of Records) Rules, 2005 issued vide Gazette Notification G.S.R 538(E) dated June 1, 2017, it is mandatory to obtain Aadhaar for linking all bank accounts, insurance, pension, mutual funds and SIM cards for individuals who are eligible to enrol for Aadhaar.

UNSTARRED QUESTION NO. 405

TO BE ANSWERED ON THE 6TH FEBRUARY, 2018/ MAGHA 17, 1939 (SAKA)

Bank frauds using Aadhaar number

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405. SHRI RIPUN BORA:

Will the Minister of FINANCE be pleased to state:

  1. whether it is a fact that incidents of money being fraudulently withdrawn from bank accounts using the customers’ Aadhaar number have come to light recently;

  1. if so, the details thereof with the number of such cases and the amount withdrawn, bank-wise; and

  1. the steps taken by Government to prevent such cases and whether any action is taken against the bank employees responsible for these frauds?

ANSWER

The Minister of State in the Ministry of Finance

(SHRI SHIV PRATAP SHUKLA)

(a) to (c): As per data reported by Public Sector Banks (PSBs) there have been incidents of money being fraudulently withdrawn from bank accounts using the customers’ Aadhaar number in a few banks. Bank-wise details of such cases, including the amount involved, the steps taken to prevent such cases and action taken against those responsible, are at Annex.

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*******

 

Annex

Rajya Sabha USQ No. 405, for 6.2.2018

Bank frauds using Aadhaar number

Sr. No.

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Bank

Number of cases

Amount involved (in lakh Rupees)

Action taken

1

Allahabad Bank

1

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0.49

Matter is under investigation/examination.

2

Bank of India

2

137.00

In both cases, wrongful/fraudulent mapping of Aadhaar numbers was done by business correspondents/staff. Bank has sensitised operational staff to take proper precautions by mapping Aadhaar numbers, strengthening control measures, and stepped up inspections to prevent such frauds in future.

Bank has initiated disciplinary action against the erring staff.

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3

Syndicate Bank

2

2.26

The amounts fraudulently withdrawn have been recovered. To prevent such cases, the bank is verifying all Aadhaar-seeded accounts through Aadhaar Authentication and has issued standard operating procedures for, and instructions for due diligence on, Aadhaar seeding.

4

UCO Bank

1

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1.95

To prevent such frauds, the bank has issued instructions to raise staff awareness and ensure due caution.

Disciplinary action has been initiated against a bank employee, an FIR lodged against the erring staff and the Business Correspondent (BC) concerned, and the services of the BC discontinued.

Source: Banks

 

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Written By

Vidyut is a commentator on socio-political issues with a keen interest in behavioral sciences, digital rights and security and manages to engage her various proficiencies to bring an unusual perspective to issues related with the intersection of tech and people.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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