Aadhar must be linked to bank accounts by Dec 31, mandatory for transactions above Rs 50,000

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Tightening noose around those hoarding black money, the government has now made it mandatory to link Aadhar number with bank accounts by December 31 failing which the account will be suspended till it is done.

The government has also made Aadhar number mandatory for opening new bank accounts and financial transactions of Rs 50,000 and above. 

The government move comes close on the heels of the decision last week that all income tax assessees should link their Aadhaar numbers with Permanent Account Numbers (PAN) when they file their returns, after the Supreme Court upheld the law in this regard. 

If a customer, eligible to be enrolled for Aadhaar and obtain the PAN, already has a bank account, he needs to submit the Aadhaar number and PAN by December 31, according to a Revenue Department notification.

In case a customer having an account failed to submit his Aadhaar number and PAN by December 31, the account would cease to be operational till the time these numbers are submitted, it said.

The measure had been taken for prevention of money laundering, it added.

"Provided that if the customer does not submit the Permanent Account Number, he shall submit one certified copy of an 'officially valid document' containing details of his identity and address, one recent photograph and such other documents, including in respect of the nature of business and financial status of the client as may be required by the reporting entity," it said.

The Union Budget 2016-17 had mandated seeding of Aadhaar number with PAN to negate the possibility of individuals evading tax using multiple PANs.

The notification -- issued by amending the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 -- tightened the rules also for small accounts, which can have a maximum deposit of Rs 50,000 and can be opened without having officially valid KYC (Know Your Customer) documents.

According to the notification, such accounts can be opened only at bank branches with core banking solution.

Such accounts can also be opened at branches where it is possible to manually monitor and ensure that foreign remittances are not credited to such accounts and stipulated limits on monthly and annual aggregate of transactions and balance are not breached.

Such small accounts will remain operational initially for 12 months, and thereafter for a similar period if the account holder provides evidence that he or she has applied for officially valid identification documents.

"The small account shall be monitored and when there is a suspicion of money-laundering or financing of terrorism or other high-risk scenarios, the identity of claimant shall be established through the production of official valid documents," it said.

Post June 1, if a person does not have an Aadhaar number at the time of opening of account, then he or she has to furnish proof of application of enrolment for Aadhaar and submit the Aadhaar number to the bank within six months of opening the bank account.

"In case the client, eligible to be enrolled for Aadhaar and obtain a PAN, does not submit the Aadhaar number or the PAN at the time of commencement of an account-based relationship with a reporting entity, the client shall submit the same within a period of six months from the date of commencement of the account-based relationship," the notification said.

Mamata Banerjee slams Centre for making Aadhaar must for bank accounts

West Bengal Chief Minister Mamata Banerjee on Friday flayed the Centre for making Aadhaar mandatory for opening bank accounts, saying it would make the poorest of the poor the worst sufferers.

"The poorest of the poor, the marginalised people will be the worst sufferers if #Aadhaar is made mandatory unilaterally," Banerjee said in a tweet.

Banerjee also questioned privacy issues linked to the Aadhaar card and said that the Centre must assure security of the citizens of the country before making it mandatory.

"Aadhaar has serious issues about privacy. Govt must not make it mandatory before 100% coverage is achieved," the chief minister said.

Banerjee had earlier criticised the Centres decision to make Aadhaar cards mandatory for availing the mid-day meal scheme and accused it of snatching the rights of the poor.

She had alleged that rather than supporting the poor, the Centre was snatching away their rights.

(With agency inputs)