Indian government is allowing banks to verify individual transactions that exceed a certain annual limit using facial recognition and an iris scan in some cases, in a bid to reduce fraud and tax evasion, as per sources.
A few large private and public banks have begun using the option, said one of the sources, a banker, who decline to name the banks.
The advisory allowing the verification is not public and has not previously reported.
The verification is not mandatory and is intend for cases where another government identification card use for tax purposes, the Permanent Account Number (PAN) card, is not share with banks.
The prospect of banks using facial recognition has concern some privacy experts.
Government has said it is targeting parliamentary approval of a new privacy law by early 2023.
The new measures can be use to verify identities of individuals making deposits and withdrawals exceeding Rs. 2 million in a financial year, where the Aadhaar identity card is share as proof of identify, said two government officials, who ask not to be name because the information is not public.
The Aadhaar card has a unique number tied to an individual’s fingerprints, face and eye scan.
India’s finance ministry in December asked banks to take “necessary action” on a letter by the Unique Identification Authority of India (UIDAI), which suggest verification should be done through facial recognition and iris scanning, especially where fingerprint authentication of an individual fails.
The letter from the UIDAI, which is responsible for Aadhaar card issuance, makes no mention of a consent framework for the verification.
Nor does it say that banks can take any action if a customer refuses.
A UIDAI spokesperson said Aadhaar verification and authentication happens only with the explicit consent of the user.
Use of Aadhaar-based biometric authentication helps in guarding against possible misuse as per UIDAI spokesperson.
UIDAI spokesperson said :
UIDAI spokesperson also said that authentication and verification does not mean storing of data.
The latest advisory follows a government order last year that mandate the quoting of an Aadhaar card or PAN number for making deposits or withdrawals exceeding 2 million rupees in a financial year.
The federal finance ministry did not respond to requests for comment.