India’s Kotak Mahindra Bank has suspended opening of new “811” digital savings accounts as it reviews the verdict on usage of Aadhaar for authentication delivered by the country’s apex court recently.

The Aadhaar identity card served as the underlying document as per Know Your Customer (KYC) norms for opening the instant “811” digital account. However, the Supreme Court, in its recent ruling, barred private entities, including banks, from using Aadhaar data and clarified that it is neither compulsory to obtain the number for opening a new bank account nor is it mandatory to link with an existing one.

With the launch of 811 accounts in March 2016, Kotak Mahindra Bank had aimed to double its customer base of 8 million customers within 18 months. “As on September 30, 2018, the total customers at the bank crossed the 16 million mark,” the lender said while announcing its quarterly results. Over three-fourth of the new customers came from the 811 accounts. These accounts also contributed 17% to the growth in credit cards.

With these instant digital accounts, Kotak Mahindra Bank had aimed to promote cashless transactions in the aftermath of demonetisation. This account could be opened remotely by a customer without visiting any branch with the help of online verification using just the Aadhaar card.

“We are reviewing 811 strategy in view of Supreme Court judgement,” Kotak Mahindra Bank said. The lender is looking at other alternatives since post the ruling customers are free to de-link their bank accounts and Aadhaar numbers, leading to discontinuation of such digital accounts where only Aadhaar was used for KYC authentication.

As per the court ruling, Aadhaar now remains one of the official valid documents to open a bank account.

by Parnika Sokhi
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