The Aadhar Loopholes

The Indian Express     5th October 2021     Save    

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.