ETtech Explainer: Behind crackdown on unauthorised use of govt databases for user onboarding
The Union government is restricting private firms from using official databases like
Aadhaar
to offer identity verification services to their clients as part of a crackdown on unauthorised access to sensitive databases.
According to two people in the know, officials of the Ministry of Electronics and Information Technology (
MeitY
) have conveyed to the executives of multiple technology-led startups to abstain from offering offline Aadhaar-based
KYC services
because they have been doing it through unauthorised channels.
ET had reported on June 9
that startups like Zoop, Surepass, Digitap and Signzy were impacted by a government order restricting access to their websites through telecom networks.
While the government is tightening scrutiny of data platforms, industry insiders are trying to find regulated channels through which Aadhaar verification can be done.
ET explains identity verification services provided by these startups and the issues around them.
What are the core services being provided?
Discover the stories of your interest
Blockchain
5 Stories
Cyber-safety
7 Stories
Fintech
9 Stories
E-comm
9 Stories
ML
8 Stories
Edtech
6 Stories
As the customer onboarding journey goes digital, it is critical for financial services companies, consumer technology firms to validate customers. That is where ID verification startups come in, offering verification of documents submitted by consumers. They also help authenticate customers' identity numbers by cross-checking with government databases. Players like IDfy, Signzy, DigiO and others offer services like video KYC, Aadhaar e-Sign and others.
What is the problem here?
The Centre is trying to find out whether these services are being provided through legal channels and lawful means. Industry sources told ET that while large venture-funded startups stick to the rules and are also regulated in most of the cases, many smaller players in the ecosystem gain unauthorised access to some of the government databases. 'Some of the platforms are also involved in scraping from government websites, getting consumer data through unregulated means,' chief executive at an ID verification startup said on condition of anonymity. Some of the data contained in Aadhaar are personally identifiable information (PII), while some of the GST data might not be classified as PII.
Who is looking into the issue?
MeitY, which is in charge of all the digital properties of the government, restricted access to some of these websites through certain telecom networks. Once executives of these firms met officials, they were told to follow designated channels for access to the Aadhaar database, so that consumers can be verified by only regulated platforms through their Aadhaar numbers. Similar services are also provided by the GST (goods and services tax) database and through the income tax database.
Why do startups need these platforms?
Fraud prevention is one of the key areas for which startups are dependent on these platforms. Mostly for fintech services like digital lending, insurance, payments and merchant KYC, backend customer verification is extremely useful. They integrate with these service providers to offer verification on the go. 'If there are too many hops, then the customer might drop off. Once these verifications happen via API integrations, the customer experience gets smoother,' founder of a fintech startup said.
Other issues
As the online verification sector has grown, startups have also been scouting for as many alternate data points as possible for these enrichment services. Going beyond the GST database or PAN database, platforms have been offering enrichment services on top of customers' UPI IDs. The National Payments Corporation of India (NPCI) cracked down on such unauthorised use of the UPI IDs in October last year. Now, the government is also trying to crack down on the use of Aadhaar through unauthorised means.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Indian Express
27 minutes ago
- Indian Express
Zoomcar hit by massive data breach affecting 84 lakh users, SEC filing shows
Zoomcar users' personal data has been stolen in a data breach where hackers gained unauthorised access to its information systems, the car-sharing platform has confirmed. At least 84 lakh customers were affected in the security incident that took place on June 9, according to a Zoomcar filing with the US Securities and Exchange Commission (SEC). The Bengaluru-based company said it had become aware of the data breach after a few of its employees received external communications from a threat actor who claimed responsibility for the data breach. Personal data stolen in the data breach includes the names, phone numbers, and car registration numbers of users. However, Zoomcar said that it had no evidence of hackers gaining access to financial information such as plaintext passwords and other sensitive identifiers. 'Upon discovery, the company promptly activated its incident response plan,' Zoomcar said in its filing. 'In response to the incident, the company has taken immediate actions to contain the threat and enhance its security posture. These measures include implementing additional safeguards across the cloud and internal network, increasing system monitoring, and reviewing access controls,' the company said. 'The company is also engaging with third-party cybersecurity experts to further assist with the investigation. The company has also notified the appropriate regulatory and law enforcement authorities and is cooperating fully with their inquiries,' it added. Zoomcar also said that the data breach had not impacted its operations. 'However, the Company continues to evaluate the scope and potential impacts of the event, including legal, financial, and reputational considerations, as well as any associated remediation costs,' it said. Zoomcar was founded in 2013 as a platform through which customers could rent cars on a monthly, weekly, daily, and hourly basis. In 2023, the company merged with an American blank-check firm called Innovative International Acquisition Corp (IOAC) and became a US‑listed public company registered in Delaware. Hence, it had to report the security incident in adherence to SEC financial reporting standards. Currently, Zoomcar operates in 99 cities with over 25,000 cars and more than 10 million users. Besides India, it is also available in Egypt, Indonesia, and Vietnam. In February this year, the company saw a 19 per cent surge in car rental bookings from the year ago period with contribution profit growing by 500 per cent to $1.28 million and net loss at $7.9 million.
Time of India
34 minutes ago
- Time of India
German defence startup Helsing raises $693 million in latest investment round
Live Events German defence start-up Helsing has raised 600 million euros ($693.30 million) in its latest investment round, lead by Spotify founder Daniel Ek , the firm said on latest investment round has raised Helsing's value to $12 billion, the Financial Times reported on Tuesday, citing people familiar with the positions the start-up among the top five private tech companies in Europe, the FT investment round was lead by Prima Materia, an investment company founded by Ek and Spotify investor Shakil Khan, which doubled its investment in the investors included Lightspeed Ventures, Accel , Plural, General Catalyst and SAAB, Helsing said in a Munich-based defence start-up, which specializes in AI software and is moving to produce its own drones, aircraft and submarines, hopes to benefit from governments ramping up defence spending amid rising geopolitical tensions.
Mint
42 minutes ago
- Mint
Indonesian coal industry risking a tough transition as demand declines, report says
HANOI, Vietnam (AP) — Indonesia's coal industry is facing mounting pressure and should diversify as China and India, its biggest customers, cut back on imports of the heavily polluting fossil fuel, according to a report from a Jakarta-based energy thinktank, Energy Shift. The report released Tuesday says that the industry, which accounts for about 3.6% of Indonesia's economic activity and employs tens of thousands of people, needs to shift toward cleaner energy now or risk being forced into a costly transition later. Indonesia is the world's biggest exporter of coal, which is central to its economy, generating tax revenues and jobs. So the expected long-term decline in demand presents a unique challenge for the country of some 280 million. Indonesia's coal production is still rising, hitting a record 836 million tons in 2024, nearly 8% more than the year before. The industry also relies heavily on just a few buyers, with China and India buying nearly two-thirds of Indonesia's coal exports in 2023. China still relies on coal for more than half its electricity generation. It accounted for 41% of global coal imports in 2024, or nearly 543 million tons. But more than 75% of the growth in demand last year was met by clean energy. India's coal imports fell 8.4% to 183.42 million metric tons from April to December 2024, down from 200.19 million metric tons in the same period a year earlier, government data shows. The drop is part of India's push to reduce import dependence by ramping up domestic coal production. Imports for industries like cement, steel and aluminum that buy coal at market rates declined 12% while imports for thermal power plants fell even more sharply, down 29.8%. Indonesia's coal exports fell to a three-year low in January-April of this year, a shift that may signal a longer term decline, experts say. 'These are signs that Indonesian coal miners have to start taking seriously as well,' said Hazel Ilango of the Energy Shift Institute. There are other risks too. Most Indonesian coal companies are tightly controlled by insiders — owners, executives, and board members — who hold about 75% of company shares on average, according to the report. Regulations such as domestic supply rules and high royalties also limit profits, while access to global financing remains restricted. The private sector and investors are generally uninterested in long-term transition plans and are more focused on immediate profits, while government policies remain inconsistent, said Putra Adhiguna of the Energy Shift Institute. Experts say that the country's coal policy is riddled with contradictions. It has pledged to cut emissions and transition to clean energy, but it continues to expand coal production and approve new plants. Domestic subsidies keep coal cheap, but abrupt export bans have disrupted global markets. Meanwhile, the state utility plans to retire coal plants early under a $20 billion transition deal — even as new ones tied to the industry are still being built. As major coal importers like China and India cut imports to boost their energy security, Indonesia's coal sector needs to plan ahead, said Jordan Lee, an energy transition expert at the Tony Blair Institute for Global Change in Jakarta. 'The reason I say that is basically if you look at what happened with some big oil companies that have tried something similar, we have seen the market not respond too positively,' he said. The Associated Press' climate and environmental coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP's standards for working with philanthropies, a list of supporters and funded coverage areas at
