How Supreme Court Ruling Against Mandatory National ID Affects Banking Services
After the Supreme Court issued an interim order halting the government’s decision to make the National Identity Card (NIC) mandatory for banking services and directed the enactment of a data protection law, significant questions have arisen regarding the ongoing NIC policy. Nepal Rastra Bank had previously instructed banks and financial institutions to update the NIC details of existing account holders by the month of Ashwin. However, last week, a bench comprising Justices Sapana Malla and Meghraj Pokharel canceled this directive, issuing a mandate that no individual should be denied banking services due to lack of a National ID.
The Supreme Court has instructed that until the NIC is obtained, banks may provide services based on other identity documents such as citizenship certificates. Additionally, the Court directed the government to formulate legislation ensuring the security and privacy of data collected during the NIC registration process. This ruling has emerged amid government efforts to integrate the NIC with public services under a ‘single identity card policy,’ encompassing citizenship, banking, healthcare, education, and social security sectors. Government officials consulting legal experts suggest that this decision could impact the implementation of biometric-enabled identity cards.
In Ashad 2081 BS, the government had published a gazette notice mandating the NIC for banking, social security, and various other sectors. The notification exempted children, individuals unable to care for themselves, vulnerable or disabled persons, and citizens over 90 years old from this requirement. The banking system was structured to require an electronic record of the NIC to open accounts or verify customer identity via NIC number. By the end of Ashad this year, all banks were issued a circular demanding self-declaration of whether account holders possessed an NIC.