Now, You Can’t Open, Operate Bank Accounts Without Aadhaar

The government has made Aadhaar mandatory for opening bank accounts and making transactions over Rs 50,000, days after the Supreme Court upheld a change in the tax law that makes the biometric ID a must to file returns .

All bank accounts will have to be linked to the unique identification number by December 31, failing which they will cease to be operational, according to a gazette notification by the finance ministry dated June 1. For opening a new account, an individual who does not have the Aadhaar ID or PAN, will have to submit the details within six months.

The government is pressing ahead with its plan to expand the Aadhaar footprint after the apex court didn’t strike down Section 39AA of the Income Tax Act that makes it mandatory to link the unique ID with PAN. While the top court provided “partial relief” to those who do not have Aadhaar, the tax department has reiterated that it will be required to file returns.

The notification amends the Prevention of Money Laundering (Maintenance of Records) Rules, 2005, and asks for quoting Aadhaar, along with the permanent account number (PAN) or Form 60 for making transactions above Rs 50,000. Form 60 has to be submitted by an individual who does not have a PAN, but makes a transaction that involves one.

Also Read: Government Vs Aadhaar Holdouts: Who Won?

The amendment tightens rules for small bank accounts, by giving the authority to open such accounts only to core-banking-solution-linked branches, and the ones where foreign remittances to such accounts can be manually monitored.

A small account can be opened by individuals who do not have officially valid know-your customer (KYC) documents. According to RBI guidelines, in such accounts:

• the aggregate of all credits in a financial year does not exceed Rs 1 lakh;
• the aggregate of all withdrawals and transfers in a month does not exceed Rs 10,000; and
• the balance at any point of time does not exceed Rs 50,000.

The notification said these accounts shall remain operational initially for a period of 12 months, post which the account holder will have to provide evidence of having applied for any official document to the bank within 12 months.

“The small account shall be monitored and when there is suspicion of money laundering or financing of terrorism or other high risk scenarios, the identity of client shall be established through the production of officially valid documents… and the Aadhaar number of the client or where an Aadhaar number has not been assigned to the client, through the production of proof of application towards enrollment for Aadhaar along with an officially valid document,” said the notification.