UIDAI asks banks “not to discontinue” Aadhaar Enabled Payment System

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On Friday, the nodal body for Aadhaar, Unique Identification Authority of India (UIDAI) asked banks not to discontinue the Aadhaar Enabled Payment System (AEPS) as it may create obstruction in the delivery of welfare benefits.

This came in the wake of a letter by SBI to National Payments Corporation of India (NPCI) informing about its intention to discontinue AEPS beacuse its continuation might be a violation of the recent Supreme Court judgment.

In a note circulated to banks, CEO of NPCI and Deputy Governor of RBI, UIDAI said, “The matter has been carefully examined, and the apex court has upheld the constitutionality of the Aadhaar programme, specifically Section 7 of the Aadhaar Act. Therefore any action to discontinue such payment/receipt mechanism (AEPS, BHIM, Aadhaar Pay) or bank accounts by banks, on the ground that it is not possible to distinguish their use for delivery of welfare benefits or other purposes may be held contrary to Section 7 of Aadhaar Act and Puttaswamy-II judgment as it will result in creating obstruction in delivery of benefits and may cause denial in deserving cases.”

UIDAI further made it clear that where a payment/ receipt mechanism using Aadhaar authentication such as AePS, BHIM, Aadhaar Pay has been established or a bank account has been opened or verified using Aadhaar eKYC for the purpose of correctly identifying a current or potential beneficiary of welfare scheme, there is nothing in the apex court’s recent judgment that bars use of such a mechanism.

It also said,”Instead it is obligatory on banks to continue to provide such facility to people.”

 Supreme Court gave a landmark verdict in September restricting the use of Aadhaar authentication by private entities in the absence of a legal provision, but allowed its mandatory use for welfare schemes, filing of Income Tax (IT) returns and allotment of Permanent Account Number (PAN).


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