Indian banks will soon use facial recognition and iris scanning for some transactions

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India’s government will allow banks to verify personal transactions above certain annual thresholds using facial recognition and iris scanning under certain circumstances in an effort to reduce fraud and tax evasion, three sources said. In Reuters.

Several large private and public sector banks have started using this option, said one of the bankers, who declined to be named. The notification authorizing the inspection is not publicly available and has not been previously announced.

Verification is optional and is for situations where the Permanent Account Number (PAN) card, another government identification card used for tax purposes, is not shared with banks.

Banks’ facial recognition capabilities have some privacy experts worried.

“This raises serious privacy concerns, especially when India does not have a specific law on privacy, cyber security and facial recognition,” said Pawan Duggal, a lawyer and cyber law expert.

The government has said it aims to have the new privacy law approved by parliament by early 2023.

The new measures could be used to verify the identity of people receiving deposits and withdrawals of more than Rs. 2 million in the current fiscal year, said two government officials, who requested anonymity because the information is not public.

Aadhaar card contains a unique number linked to a person’s fingerprints, face and eye scans.

In December, India’s finance ministry asked banks to take “necessary action” following a letter from the Unique Identification Authority of India (UIDAI), which suggested that verification be done through facial recognition and iris scanning, especially when fingerprint authentication fails.

The letter from the UIDAI, which is responsible for issuing Aadhaar cards, does not mention the consent system for verification. It also does not say that banks can take action if the customer refuses.

Responding to questions from Reuters, a UIDAI spokesperson said that Aadhaar verification and authentication is done only with the express consent of the user. Use of Aadhaar-based biometric authentication will help guard against potential misuse, he said.

“UIDAI advises all authentication and verification facilities to use facial or iris authentication to accommodate residents where fingerprint authentication fails.” He added that authentication and verification does not mean data retention.

The latest notification is in line with the government’s order last year, which required linking of Aadhaar card or PAN number for deposits or withdrawals of more than Rs 2 crore in a financial year.

The federal finance ministry did not respond to requests for comment.

© Thomson Reuters 2023


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