The Union Cabinet has approved the promulgation of an ordinance which would allow private companies to use Aadhaar for authentication and verification. The ordinance has the same changes to the Aadhaar Act as proposed by the Aadhaar and Other Laws (Amendment Bill), 2018, which was passed in the Lok Sabha last month, but later lapsed in the Rajya Sabha in the same month.

Apart from the Aadhaar Act, the ordinance has also amended the Telegraph Act and the Prevention of Money Laundering Act.

The ordinance has given effect to the Bill, and will restart “voluntary” use of Aadhaar for physical or electronic authentication. The ordinance echoes the passing of Aadhaar as a money bill to bypass the Upper House of the Parliament. The bill also gives an option to children who attain 18 years of age to exit from Aadhaar.

What does the ordinance do?

Here are some of the main amendments from the Bill:

  1. Allows private bodies such as banks and telcos to use Aadhaar as one of the ‘know your customer’ (KYC) methods for authenticating users.
  2. Interchangeable use of authentication and verification: While the original Aadhaar Act uses the term verification only twice, the amendment bill uses the term 31 times. Under the ordinance, an entity can carry out authentication, provided they are compliant with the privacy and security regulations of the UIDAI. They can also be permitted to authenticate a user under the provisions of Parliamentary law or if the authentication is done in the “interest of the State.”
  3. A child Aadhaar card holder, within a period of six months of attaining 18 years of age, can make an application for cancellation of his Aadhaar number. Earlier a young adult did not have the provision of opting out.
  4. Allows for voluntary use of Aadhaar number for KYC under the Telegraph Act and Prevention of Money Laundering Act. A user can voluntarily identify herself through one of these modes: Aadhaar authentication, offline verification, passport or any other officially valid document.
  5. The amendment provides for establishment of the UIDAI Fund 
  6. It lays out a mechanism for penalty for failure to comply with the provisions of the Act, such as appointment of an adjudicating officer, punishment for up to 3 years for violations, and also allows the Aadhaar number holder to file a complaint.

Also read: Why Amend the Aadhaar Act Without First Passing a Data Protection Bill?