Reserve Bank of India (RBI) has been stressing hard to introduce biometric based services and features for various banking related purposes. This is clearly a misguided and waste exercise as RBI is contemplating utilising the Aadhar number as a base for biometric authentication. There is no second opinion that Aadhar project is not only illegal and unconstitutional but it is also an unreliable and insecure methodology.
In fact, the Aadhar project has already been challenged in numerous courts and even the Supreme Court of India has held that Aadhar card cannot be made mandatory for availing public services. Even the banks in India have refused to obey the dictates of RBI to use Aadhar numbers for various purposes.
Surprisingly, RBI has suggested in the past to use Aadhaar number/card/data by all new ATMs and point of sale (POS) machines. Clearly this direction of RBI was illegal and in clear violation of the direction of Supreme Court of India. That is the reason why Banks in India are simply ignoring the same and they are well within their rights to do so as RBI cannot force them to invest in illegal and unlawful projects.
Now even the RBI seems to have understood this legal and technological position. In a move that will bring relief to banks and credit card issuing companies, the RBI has put on hold an order requiring all future credit card swipe machines and ATMs to be capable of biometric authentication. RBI has instead decided to launch a pilot project where issuers of prepaid cards are allowed cash withdrawals on the basis of biometric authentication. However, even this decision of RBI is not free from legal complications and this decision may also be revised by RBI in the near future.
The move comes in the wake of banks complaining that implementing biometric authentication across all point of sales terminals (credit card swipe machines) was proving to be a challenge. The first issue was that there were not many suppliers in the market. Secondly, their tests showed that the authorization using fingerprints took up to 20 seconds on a 3G connection as against less than five seconds earlier.