The Aadhar Loopholes

Context: The Aadhaar-enabled Payment System (AePS) has numerous loopholes which need to be address.

About Aadhaar-enabled Payment System (AePS)

• AePS enables a person to withdraw money from their bank account across the country using a local “business correspondent” (BC).
• Business correspondent: They are informal bank agent equipped with a biometric Point-of-Sale (PoS) machine (a kind of micro-ATM).
• Mechanism: If anyone wish to withdraw, they have to submit their bank name and Aadhaar-based biometric authentication (ABBA) to BC. In return, BC will provide them cash and for this to be possible, their bank account must be linked with Aadhaar.

Challenges in Aadhaar-enabled Payment System (AePS)

• Fraudulent with Customers: A corrupt BC can deceive any customer, who are not aware about it, and transfer his money to their bank account put her finger in the PoS machine under some pretext.
  • Even bank would unable to help customers in this case dur to lack of fraudulent BC details.
  • The scholarship scam in Jharkhand shows that AePS-enabled fraud is not a sporadic problem but a systemic vulnerability.

Ways to reduce vulnerabilities in AePS

• Manual or digital entries in passbooks: BCs could be required to make manual or digital entries into customer’s passbook, which would act as a permanent, verifiable receipt that cannot be denied to the customer easily.
• Transparency in transaction records: BCs must have a clear identification in transaction records.
• SMS Alert should be done to the customer’s mobile number for every transaction.
• Roaming BCs with low literacy levels should be banned in states.
• Better grievance redressal facilities must be available to the victims of AePS fraud.

Conclusion: The vulnerabilities of AePS are putting countless people in danger of being robbed of their hard-earned savings.