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Aadhaar-less bank accounts not valid after December 31

The move is aimed at streamlining payment of benefits and cutting down on wastage and fraud

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Quoting Aadhaar details is now mandatory for opening of bank accounts and also for any financial transaction of Rs 50,000 and above, and all existing accounts will turn invalid if not linked to Aadhaar by December 31, 2017, the government said on Friday.

The government has already made Aadhaar a must for obtaining Permanent Account Numbers — to stop individuals from using multiple PANs to evade taxes — and filing income-tax returns.

The Centre in consultation with the Reserve Bank of India (RBI) has now amended the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005. The amendment makes it mandatory for individuals, companies and partnership firms to quote Aadhaar along with PAN or Form 60 for all financial transactions of Rs 50,000 or above with effect from June 1.

The Aadhaar scheme to set up the world's biggest biometric database was started seven years ago to streamline payment of benefits and cut down on massive wastage and fraud. Tightening the rules for small accounts the amendment said such accounts, which can have a maximum deposit of Rs 50,000, can be opened only at bank branches which have core banking solutions.

They can also be opened at a branch where it is possible to manually monitor and ensure that foreign remittance are not credited to such accounts and stipulated limits on monthly and annual aggregate of transactions and balance are not breached, the amended PMLA rules said.

Such small account shall remain operational initially for a period of 12 months and thereafter for a similar period if the account holder provides evidence that he or she has applied for officially valid identification documents.

"The small account shall be monitored and when there is a suspicion of money laundering or financing of terrorism or other high risk scenarios, the identity of claim shall be established through the production of official valid documents," it said.

An Aadhaar card, containing a 12-digit identification number, is issued to individuals after collecting their biometric data such as retina scan and fingerprints. More than a billion people have registered.

...& ANALYSIS

  • The move is aimed at streamlining payment of benefits and cutting down on wastage and fraud.
     
  • But it may again prompt the Opposition to raise 'privacy' issues and 'harshness' of provisions.
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