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

The Indian government allows banks to verify individual transactions that exceed a certain annual limit using facial recognition and an iris scan in certain cases, in a bid to reduce fraud and tax evasion, three sources said. at Reuters.

A few large private and state-owned banks have started using this option, said one of the sources, a banker, who declined to name the banks. The notice allowing verification is not public and has not been previously reported.

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

The prospect of banks using facial recognition has worried some privacy experts.

“This raises significant privacy concerns, especially when India does not have a dedicated privacy, cybersecurity and facial recognition law,” said Pavan Duggal, lawyer and cyber law expert .

The government has said it is aiming for parliamentary approval of a new privacy law by early 2023.

The new measures can be used to verify the identity of people making deposits and withdrawals above Rs. 2 million in a financial year, where the Aadhaar ID card is shared as proof of identity, said two government officials, who asked not to be named because the information is not public.

The Aadhaar card has a unique number linked to an individual’s fingerprints, face and eye scan.

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 verification should be done through facial recognition and iris scanning, especially when an individual’s fingerprint authentication fails.

The letter from UIDAI, responsible for issuing Aadhaar cards, makes no mention of a consent framework for verification. Nor does it say banks can take action if a customer refuses.

Responding to questions from Reuters, a UIDAI spokesperson said Aadhaar’s verification and authentication only takes place with the user’s explicit consent. Using Aadhaar-based biometric authentication helps guard against possible abuse, he said.

“UIDAI regularly advises all authentication and verification entities to use facial or iris authentications to accommodate residents whose fingerprint authentication fails.” He added that authentication and verification do not mean storing data.

The latest notice follows a government order last year that required the citation of an Aadhaar card or PAN number to make deposits or withdrawals exceeding Rs 2 million in a financial year.

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

© Thomson Reuters 2023

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