Banks to Use Face Recognition IRIS Scan For Verification Of Some Transactions When PAN is Not Shared

According to three sources, the government is allowing banks to verify individual transactions that exceed a certain annual limit using facial recognition and, in some cases, an iris scan in an effort to reduce fraud and tax evasion. According to one of the sources, a banker who declined to be identified, a few large private and public banks have begun to use the option. The verification advisory is not widely known and has never been reported.

The verification is optional, and it is intended for situations where another government identification card, the Permanent Account Number (PAN) card, is not shared with banks. Some privacy experts are concerned that banks may use facial recognition. "This raises serious privacy concerns, particularly given India's lack of a dedicated privacy, cybersecurity, and facial recognition law," said Pavan Duggal, a cyber law expert and advocate.

The government has stated that it hopes to have a new privacy law approved by parliament by early 2023. The new measures can be used to verify the identities of individuals making deposits and withdrawals totaling more than $24,478.61 in a fiscal year, where the Aadhaar identity card is shared as proof of identity, according to two government officials who declined to be identified because the information is not public.

The Aadhaar card contains a unique number that is linked to a person's fingerprints, face, and eye scan. In December, the finance ministry directed banks to take "necessary action" in response to a letter from the Unique Identification Authority of India (UIDAI) recommending that verification be done through facial recognition and iris scanning, particularly when fingerprint authentication of an individual fails.

The UIDAI letter, which is in charge of Aadhaar card issuance, makes no mention of a consent framework for the verification. It also does not state that banks can take action if a customer refuses. Requests for comment were not returned by UIDAI or the Finance Ministry.