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Aadhaar in Investments

Aadhaar in Investments: Boosting Access & Security

“Aadhaar in Investments too?” Well, if you’ve ever wondered how a single ID could revolutionize an entire nation, look no further than Aadhaar. Born in the tech-savvy world where everything is a click away, Aadhaar isn’t just another ID; it’s the backbone of India’s digital transformation. From seamless bank transactions to hassle-free online verifications, this 12-digit wonder is simplifying our lives and changing the way we invest. 

Join us as we dive into the fascinating world of Aadhaar, exploring its impact on our daily lives and how it’s becoming a game changer, especially for modern-day investors.  

What is Aadhaar? 

Parameter When and Who? 
Date of Launch September 29, 2009 
Issuer  Unique Identification Authority of India 
First Recipient of Aadhaar Ranjna Sadashiv Sonwane, a tribal woman from Tembhali village in Nandurbar, Maharashtra 

Aadhaar is a 12-digit unique identification number issued by the Unique Identification Authority of India (UIDAI) to all residents of India. The full form of Aadhaar is “Aadhaar” itself, which means “foundation” or “base” in Hindi.  

This identification number is designed to be easily verifiable and used to establish an individual’s identity. The Aadhaar number is a unique identifier that is linked to an individual’s demographic and biometric data, including name, date of birth, gender, address, and fingerprints. 

How far has Aadhaar Traveled?  

2009: UIDAI (Unique Identification Authority of India) was established by the Planning Commission of India in 2009 to issue unique identification numbers to the citizens of India. Nandan Nilekani was appointed as chairman.  

2010: The preliminary enrolment for Aadhaar started in selected regions. A resident of Nandurbar, Maharashtra, was the first person to get enrolled in Aadhaar  

2011: By 2011, over 10 million people had enrolled in the first phase of Aadhaar registration. Concurrently, the NIA (National Identification Authority) Bill 2010 was introduced in Parliament.  

2012: By 2012, Aadhaar enrollment had crossed 200 million. Project phase II of UIDAI’s mission was approved.  

2013: By 2013, 400 million people enrolled. Supreme Court’s interim order on Aadhar card: No citizen should suffer for not having an Aadhaar card, despite mandates.   

2014: The Supreme Court ordered the revocation of any mandates making Aadhaar mandatory for benefits.  

2015: The Supreme Court restricted the use of Aadhaar to LPG and PDS schemes, stating that Aadhar is not mandatory for availing benefits.  

2016: Lok Sabha passed the Aadhar Bill, 2016 as a money bill in March 2016. The Aadhar (Targeted Delivery of Financial & Other Subsidies, Benefits & Services) Act, 2016 is notified in the Gazette of India.  

2017: Aadhar was made mandatory to link with PAN.  

2018: Aadhaar enrollments reached 1.2 billion as of December 2018.   

2019: The Aadhar and Other Laws Bill, 2019, was enacted, allowing the voluntary use of Aadhar for bank account openings.  

2020: The government announced that Aadhar can be used as a proof of identity card   

2021: Enrollment of Aadhar reached 1.3 billion by December 2021. Integration of Aadhar with the CoWin platform helped people with vaccine registration.  

2022: Aadhar was further integrated into various e-governance initiatives to streamline service delivery.  

2023: Aadhar features were enhanced to include facial recognition and offline verification options.  

2024: Free updates are available until June 14, 2024. After this date, a fee of Rs. 50 will be charged for any updates to the Aadhar card.  

What does it look like? 

The Aadhaar number, which consists of 12 digits, is divided into four parts: 

  1. First Four Digits: These are reserved for the UIDAI 
  1. Next Eight Digits: These are randomly generated and unique to each individual. 
  1. Last Digit: This is a check digit, which is calculated based on the first 11 digits. This check digit helps verify the authenticity of the Aadhaar number. 

Who can own it? 

Eligibility includes: 

  • Being a resident of India. 
  • Having valid proof of identity. 
  • Providing biometric data such as fingerprints and iris scans. 

UIDAI guidelines for determining residency include: 

  • Citizens of India. 
  • Non-resident Indians. 
  • Persons of Indian origin. 

What is Aadhaar to the Commoners? 

Aadhaar is like your digital superhero, making life smoother and cooler for us everyday folks. Here’s how: 

Easy-Peasy ID 

Ditch the stack of IDs–Aadhaar makes life easy with one digital ID. No more digging through your wallet–Aadhaar’s got you!

Banking Made Better 

Say goodbye to endless paperwork at the bank. With Aadhaar, opening a bank account is as easy as snapping your fingers. Plus, it’s super secure, keeping your hard-earned cash safe and sound. 

No More Waiting in Lines

Remember those long queues for government services? Well, Aadhaar waved its magic wand and made them disappear. Now you can access services like getting a passport or a SIM card without breaking a sweat. 

Cash in Your Pocket

Aadhaar ensures that government benefits reach you directly, no middlemen involved. So, whether it’s your scholarship or pension, the money goes straight to your account, making life a whole lot easier. 

Your Key to the Digital World 

Aadhaar isn’t just about physical stuff; it’s your ticket to the digital universe. From signing up for your online courses to ordering groceries online, Aadhaar makes it all possible with a tap of your finger. 

“I don’t have an Aadhaar, how do I get one?” 

Process 

Step 1: Appointment 

Book an appointment online via the UIDAI website or visit an Aadhaar Enrollment Center without an appointment.  

Step 2: Fill the Enrollment Form 

Complete the Aadhaar Enrollment Form (Form No. UID/AAD/1/2016) with personal details like name, D.O.B., gender, and address. 

Step 3: Submit Docs 

Provide proof of identity (PoI), proof of address (PoA), and proof of date of birth (DoB) along with them. 

Step 4:  Provide Biometric Data 

Provide fingerprints, iris scans, and a photograph for your Aadhaar card (your photo will be clicked at the center only, so make sure that you look your best 😉 

Step 5: Collect the Acknowledgement Slip 

Collect the acknowledgment slip containing the 14-digit enrollment number for tracking your application status. 

Step 6: Wait for Verification 

Your application will undergo verification, which will take up to 90 days. 

Step 7: Download e-Aadhaar 

Once verified, download a digital copy of your Aadhaar card, known as e-Aadhaar, using your enrolment, Aadhaar number, or virtual ID (VID). 

How to Update Details in Aadhaar? 

Online 

  1. Visit the official UIDAI website. 
  1. Click on “Update Demographic Data and Check Status” and log in with your Aadhaar number and OTP. 
  1. Enter your Aadhaar number and captcha. 
  1. Send an OTP to your registered mobile number and enter it. 
  1. Chooses “Update Demographics Data”. 
  1. Select the relevant options and proceed. 
  1. Make changes and upload required documents. 
  1. Review entered details. 
  1. Submit change request and track status with URN. 

Offline 

1. Request an application correction form at the nearest Enrolment Centre. 

2. Fill out the form and attach the necessary documents. 

3. Submit the application form to update the changes. 

4. Pay a fee of Rs. 25 for changing the address on the Aadhaar Card. 

5. Keep the acknowledgement slip provided for future reference. 

What can all be changed? – You can update your name, D.O.B, gender, and address on your Aadhaar card if needed. However, your Aadhaar number (UID) and biometric data (fingerprints, iris scans) cannot be changed once registered. 

Let’s say you need to update your mobile number in Aadhaar; you can follow these steps to do the same:

Offline

1. Visit the nearest Aadhaar Seva Kendra.
2.Bring original Aadhaar card, proof of identity (like Passport), proof of address (electricity bill).
3.Fill Aadhaar update form accurately.
4.Submit form, Aadhaar card, and documents.
5.Undergo bio-metric authentication (fingerprint, iris scan).
6.Provide new number for update. 7.Receive knowledge acknowledgement slip with URN for status check.

Online

If you wish to update the number online, you can simply follow these steps:
1. Go to the official UIDAI website: https://uidai.gov.in/
2. Click on “Update Aadhaar” under the “My Aadhaar” tab.
3. You’ll land on the Aadhaar Update Service Portal.
4. Enter your Aadhaar number and get an OTP.
5. Choose “Mobile Number” and type-in your new one.
6. Verify the OTP sent to your current mobile.
7. Enter the OTP and submit your request.
8. You’ll get an acknowledgement with a URN for future reference.

“What if there’s a Name Mismatch in My Aadhaar?”

If your name doesn’t match your Aadhaar and PAN card, the first step is to correct it. You can update your name on your Aadhaar card by visiting the nearest UIDAI Permanent Enrolment Center, or update your PAN card by applying on the NSDL website.

You only need to carry 3 things with you, i.e.,:

  1. Original Aadhaar card copy
  2. One Proof of Identity (like a passport)
  3. One Proof of Address (Electricity bill not older than 3 months)

Here’s a list of some other documents you can carry as proofs:

  • Bank statement or bank passbook
  • Post office passbook or account statement
  • Ration card
  • Voter’s identity card
  • Valid Indian driving license
  • Any photo identity card issued by the government or public sector unit
  • Water bill
  • Property tax payment receipt
  • Telephone or post-paid mobile bill
  • Credit card statement
  • Insurance policy
  • Marriage certificate

These are some of the commonly accepted government-authorized documents by UIDAI to support the name rectification process for your Aadhaar card. Using Aadhaar OTP and other UIDAI services, you can easily resolve the name mismatch issue between Aadhaar and PAN.

Role of Aadhaar in Investments

The Ultimate Breakdown 

KYC using Aadhaar 

  • SEBI (Securities and Exchange Board of India) mandates brokers/brokerage firms to link Aadhaar with investor’s Demat Accounts. 
  • Aadhaar serves as identity proof. 
  • Investors can complete Demat account KYC using their Aadhaar number. 
  • Aadhaar-based e-KYC is a paperless process, validated under the Information Technology Act, 2000. 
  • E-KYC holds the same value as per paper documents and is recognized for all financial services under PML Rules. 

Linking Aadhaar with Mutual Funds Account 

  • SEBI mandates brokers to link Aadhaar with investor’s Mutual Fund accounts using their trading platforms. 
  • The online linking process is hassle-free, eliminating cumbersome paperwork. 
  • Investors need to provide Aadhaar, PAN card details, Mutual funds account number, and OTP access. 

Benefits of Aadhaar-based KYC and Mutual Funds Account Linking 

  • E-KYC reduces account opening time from 4-5 days to 1 day. 
  • It eliminates physical documentation and in-person verification, reducing costs. 
  • Linking to Aadhaar prevents account deactivation and facilitates easy brokerage firm switching. 
  • SEBI monitoring prevents fraudulent transactions, ensuring account security. 
  • Investors enjoy streamlined trading and reduced brokerage charges without tedious documentation. 

Aadhaar and PAN Linking: Linking Aadhaar with PAN is essential for simplifying tax filings, enhancing transparency, preventing tax evasion, facilitating KYC processes, and eliminating duplicate PAN cards.

Importance of Linking Aadhaar with Mutual Fund Folios and SIP Registration 

Prevention of Money Laundering 

The 2017 amendment mandates Aadhaar-mutual fund linkage to prevent the investment of unaccounted money. 

Reducing Fraud and Spam  

Linking to Aadhaar helps minimize fraud and spam in mutual fund-related financial services. 

KYC Simplification 

Aadhaar linkage simplifies the KYC process, facilitating easier account and investment management for investors. 

Government Initiatives 

The government seek to establish Aadhaar as a primary legal ID proof for Indian citizens, making mutual fund linkage a step towards this objective. 

One-Time Process 

Linking Aadhaar with mutual fund is a one-time process achievable online, offline, or via SMS. 

Steps to Link Aadhaar with Mutual Fund Folio

Online Method 

  1. Visit Mutual Fund Company’s Website or App: Go to the official website or the mobile application of the AMC or mutual fund investment company where you hold your investments.
  1. Log in to your account or register if you are a new user.
  1. Look for options related to Aadhaar linking or KYC verification.
  1. Enter your Aadhaar number, PAN card details, and any other required information.
  1. Follow the on-screen instructions to submit your details and verify through OTP or other authentication methods.

Offline Method 

  1. Go to the nearest branch office of the mutual fund company where you have investments.
  1. Take your Aadhaar card, PAN card, and any other documents as required by the mutual fund company.
  2. Request and fill out the Aadhaar linking form provided by the mutual fund company.
  3. Submit the filled-out form along with copies of your Aadhaar and PAN cards to the concerned person at the office.
  4. Receive an acknowledgment receipt or confirmation slip once the process is complete.

SMS Method 

  1. Type the format ADRLNK <space> PAN <space> Aadhaar Number <space>Y. 
  1. Send the SMS to +91 921993399. 

Role of Aadhaar in other Investment Avenues 

Aadhaar in Real Estate: Breakdown 

Legal Details 

1. Mandatory Linking by 2025 

The government might make it mandatory to link Aadhaar with property transactions by 2025 to crack down the benami (translation: “unnamed/anonymously”) properties and ensure clear land records. 

2. Current Status (As of 13.06.24) 

Aadhaar isn’t mandatory for properties registration yet, but it makes the process smoother and clearer. With 99% of Indians holding Aadhaar cards, it’s solid option for real estate transactions. 

Important Insights 

Linking Aadhaar with real estate could drop property prices by up to 10% in the first year as people rush to sell undisclosed properties. Long-term, it might stabilize prices and help catch benaami properties, boosting values by 15% over five years.

Linking is easy: just update property details on the UIDAI website, taking around 30 mins. This move could attract more genuine buyers, potentially increasing their numbers by 20% in two years. However, there are challenges like ownership disputes, data security, and supporting developers, with Rs. 500 crores set aside to tackle these. 

Aadhaar in Bank Accounts & FDs 

Aadhaar plays a key role in bank accounts and fixed deposits by mandating its use for transactions over Rs. 50,000 to prevent money laundering and ensure transparency. The RBI allows banks to use Aadhaar for KYC verification, making it easier for customers to prove their identity. UIDAI guarantees data security with advanced technologies. 

Aadhaar has boosted financial inclusion, especially in rural areas, by enabling more people to open bank accounts and access benefits. However, Aadhaar isn’t mandatory for regular banking services, and other documents can be used for KYC. 

The Prevention of Money Laundering Act (PMLA) mandates Aadhaar for high-value transactions, enforcing stricter compliance. The government has allocated Rs. 1,500 crores for technological updates to support Aadhaar integration in financial systems.  

Overall, Aadhaar enhances transparency and security in financial transactions. 

Aadhaar in ITR and Taxation 

Linking Aadhaar with PAN for filing income tax returns is a legal requirement under the Income Tax Act, 1961, introduced through the Finance Act, of 2017. Not doing so can lead to a penalty of up to Rs. 1,000 under Section 272B of the Income Tax Act. This simplifies tax filing by eliminating physical document submissions and reducing errors. 

It also enhances transparency, making it easier for the government to track financial activities and reduce tax evasion. This leads to better tax collection and resource allocation for development and welfare schemes. This process includes e-verification using an OTP sent to the Aadhaar-registered mobile number, making it more efficient. 

Additionally, it facilitates the issuance of digital life certificates for pensioners and streamlines passport issuance. 

Why Do You Need to Safeguard Your Aadhaar? 

Keeping your Aadhaar safe is crucial for several reasons: 

Identity Theft 

With your Aadhaar details, fraudsters can create fake IDs and commit crimes in your name, leading to legal complications. Real Examples: In 2018, in Andhra Pradesh, a large number of Aadhaar cards were stolen, leading to a serious data breach. The stolen cards were used for fraudulent transactions like unauthorized withdrawals & transfers, causing financial losses for those affected. 

Privacy Protection 

Your Aadhaar contains sensitive personal information. Unauthorized access can lead to privacy breaches and misuse of your demographic and biometric data. Real Example: The French security researcher, Baptise Robert highlighted that thousands of Aadhaar cards were freely available online, pointing to shortcomings in security by the authorities.  

Avoid Misuse by Criminals 

Case: A gang was caught making fake Aadhaar and PAN cards without documents, charging Rs. 1,000 per Aadhaar card. Shyam Narayan Mishra, the leader, was arrested, and authorities seized 30 fake Aadhaar cards and 15 PAN cards during the raid.  

Secure Government Benefits 

Aadhaar is linked to numerous government schemes. If compromised, someone else could claim benefits for you. 

5 Tips to Keep Aadhaar Safe 

1. Keep Your Aadhaar Number Private 

Don’t share your Aadhaar number unless absolutely necessary. It’s like your secret code, so only give it to trusted places. 

2. Secure Your Aadhaar Card Location 

Keep your physical Aadhaar card safe at home. Don’t carry it around everywhere; keep it in a secure spot like a locked drawer. Let that Indian in you take charge and find a creatively secret spot to store it 😉 

Online: Save in the Digilocker app only, not in the gallery. 

3. Watch Out for Scams 

Be smart about who you share your Aadhaar information with. 

Don’t fall for messages or calls asking for your details. Double-check before you share anything. 

4. Check Your Aadhaar History 

Use the Aadhaar app to keep an eye on where your Aadhaar is used. If anything looks fishy, you’ll catch it early. 

5. Keep Your Details Updated 

Make sure your phone number and email linked to Aadhaar are current. This way, you’ll get alerts about any activity involving your Aadhaar. 

Bottom Line 

Aadhaar isn’t just a number; it’s our digital backbone, reshaping how India functions in the 21st century. From making banking effortless to ensuring seamless access to government services, Aadhaar has woven itself into the fabric of our daily lives.  

As we navigate this era of digital transformation, Aadhaar stands tall as a symbol of innovation and convenience, promising a future where identity is both secure and accessible with a tap of a click.  

Embrace Aadhaar, embrace the future. 

FAQs

Is it mandatory to link Aadhaar with mutual funds account? 

According to SEBI compliances, it is mandatory to link your Aadhaar with your mutual funds account. If you don’t, you might face limits on transactions or even get your mutual funds account shut down. It’s all about keeping things in the stock market scene. 

Why do companies take Aadhar cards? 

Companies use Aadhaar cards mainly for identity verification. It’s a reliable way to confirm someone’s identity quickly and securely, especially for things like opening bank accounts, getting mobile connections, or even just joining a new job. 

Is it OK to give someone your Aadhar card? 

It’s not a great idea to hand out your Aadhaar card to just anyone. Keep it safe and only share it when really necessary, like with government agencies or banks. Protecting your Aadhaar info helps prevent identity theft and fraud. 

Can I invest in stocks without Aadhar card? 

Yes, you can invest in stocks without needing an Aadhaar card. While it might be useful for some identity checks, it’s not mandatory for buying or selling stocks. You can use other ID proofs like PAN card or passport for stock market transactions. 

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