The UIDAI has restored Airtel’s authorization to conduct Aadhaar based e-KYC verification of its mobile subscribers, though reports indicate that the Airtel Payments Bank licence remains suspended.

The decision was taken after the Aadhaar-issuing body noted that the company had complied with “critical issues” and had offered regular status updates to the authority.

Airtel will have to submit quarterly reports on compliance with Aadhaar Act and adhere to directions issued by the UIDAI time to time.

MediaNama’s take

While Airtel exploited a nominal consent to create the Payments Bank accounts, they actually were allowed to use the mobile verifications to create Payments Banks accounts explicitly by UIDAI. RBI updated the operating guidelines for Payments Banks in February this year. The previous guidelines explicitly allowed Payments Banks to use the EKYC details from the telecom partner:

It is clarified here that if the KYC done by a telecom company, which is a promoter / promoter group entity of the PB, is of the same quality as prescribed for a banking company, PBs may obtain the KYC details of the customer from that telecom company, subject to customer consent.

In that sense, while what Airtel Payments Bank did in opening the accounts fudged consent a little by making it less noticeable, what they did was not illegal, but the result of poor protection of data in the guidelines themselves, in effect allowing accounts to be opened without any interaction between the bank and customer.

It is also not clear why the Payments Bank licence remains suspended while the Airtel authorization is restored because it was the Airtel authorization that had got misused to spawn non-consensual accounts and divert subsidies, and not the Payments Bank one. People who signed up with the Payments Bank were obviously explicitly consenting.

An educated guess here is that if most of the Payments Banks customers are acquired through the telecom company, that is the more expendable licence to axe while showing “action was taken” while restoring the Airtel licence in effect brings most operations back to normal.