As more frauds related to the Aadhaar-enabled Payment System (AePS) come to the fore, the Unique Identification Authority of India (UIDAI), has turned to artificial intelligence-based systems in a bid to limit the cases.
GS II: Polity and Governance
Dimensions of the Article:
- Aadhar Act, 2016
- Aadhaar-enabled Payment System (AePS)
- Rise in Aadhaar-enabled Payment Frauds and UIDAI’s AI-based Solutions
- Unique Identification Authority of India (UIDAI)
Aadhar Act, 2016:
- The Aadhaar Act, passed in March 2016, provides legal support to the Aadhaar unique identification number project in India.
- To establish a legal basis for the Aadhaar unique identification number system.
- To facilitate targeted delivery of subsidies and services to individuals in India through Aadhaar numbers.
Major Features of the Act:
- Eligibility: Every resident of India is entitled to obtain an Aadhaar number.
- Information to be Submitted: Biometric (photograph, fingerprint, iris scan) and Demographic (name, date of birth, address) information.
- Use of Aadhaar Number: Aadhaar numbers can be used to verify the identity of individuals receiving subsidies or services. Public and private entities can accept Aadhaar numbers as proof of identity for various purposes.
- Protection of Information: Biometric data is used only for enrolment and authentication purposes and is not shared publicly. Unauthorized access to the centralized database is punishable.
- Offences & Penalties: Unauthorized access to the Aadhaar database may result in imprisonment and a fine. The act specifies penalties for unauthorized disclosure of information.
Aadhaar-enabled Payment System (AePS)
Identity Verification and Banking Access:
- AePS enables bank customers to use their Aadhaar number as their identity to access their Aadhaar-enabled bank accounts.
- Customers can perform basic banking transactions using this service.
Basic Banking Transactions:
- AePS allows customers to perform various banking activities, including:
- Balance enquiry
- Cash withdrawal
- Remittances through a Business Correspondent.
Mandatory Requirements: To avail AePS, customers must meet the following criteria:
- Possess a Bank Account with a Bank participating in AePS.
- Link their Aadhaar to the respective bank account.
- Transactions under AePS are completed using the customer’s biometric authentication.
- This ensures secure and reliable access to banking services.
Rise in Aadhaar-enabled Payment Frauds and UIDAI’s AI-based Solutions:
Increasing Financial Crimes:
- The number of financial crimes reported in India surged from 2.62 lakhs in 2020-21 to 6.94 lakhs in 2022.
- Limited awareness about cyber frauds leads to underreporting to authorities.
UIDAI’s AI-based Solutions:
- Aadhaar Fingerprint Technology: Launched in February 2023, it uses finger minutiae and image to verify liveness of fingerprints.
- Preventing Fake Fingerprints: The technology identifies real/live fingers from cloned ones to prevent fraudulent activities.
Facial Recognition-based Authentication:
- Airtel Payments Bank collaborated with NPCI to introduce facial recognition-based authentication for Aadhaar-enabled payments.
Limits of Technological Measures:
- Challenges in AePS Fraud: Technology may fail to thwart frauds involving business correspondents (BCs) in the payment supply chain.
- Misrepresentation by BCs: BCs may manipulate transactions, misreporting higher amounts than paid to individuals without generating receipts.
- Fingerprint Cloning: Instances of fingerprint cloning may still pose challenges for AI-based technologies.
Unique Identification Authority of India (UIDAI):
- Establishment: UIDAI is a statutory authority established under the Aadhaar Act 2016.
- Purpose: It issues 12-digit Unique Identification numbers (UID) known as “Aadhaar” to all Indian residents.
- Responsibilities under Aadhaar Act 2016:
- Aadhaar Enrolment and Authentication
- Operation and Management of Aadhaar Life Cycle
- Policy, Procedure, and System Development for Aadhaar Issuance
- Authentication and Security of Identity Information and Records
- Aadhaar Numbers Issued: As of November 30, 2022, UIDAI has issued over 135 crore Aadhaar numbers to Indian residents.
- Nodal Ministry: UIDAI operates under the Ministry of Electronics and Information Technology (MeitY).
Source: Indian Express