Sections 11 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 11 gives the Adjudicating Authority the powers of a civil court on listed matters. Section 11A, printed at the end of Chapter III before Chapter IV begins, requires every reporting entity to verify the identity of its clients and beneficial owners by one of four modes, makes the choice voluntary for the client and bars the storing of the Aadhaar number or core biometric information.
This article reads both sections from the consolidated text of the Act consulted (amendments shown up to 1 August 2019). Later amendments, rules and notifications, including any notification under section 11A, should be checked; nothing after that date is stated here.
Under section 11A, a reporting entity verifies identity by Aadhaar authentication (banking companies), Aadhaar offline verification, a passport, or another officially valid document or mode notified by the Central Government. The client's use of these modes is a voluntary choice, no one can be denied services for not having an Aadhaar number, and neither the core biometric information nor the Aadhaar number may be stored. Section 11 gives the Adjudicating Authority civil-court powers on five listed matters.
Section 11: powers of the Adjudicating Authority
Section 11(1) gives the Adjudicating Authority, for the purposes of the Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of:
| Clause | Matter |
|---|---|
| (a) | Discovery and inspection |
| (b) | Enforcing the attendance of any person, including any officer of a banking company or a financial institution or a company, and examining him on oath |
| (c) | Compelling the production of records |
| (d) | Receiving evidence on affidavits |
| (e) | Issuing commissions for examination of witnesses and documents |
| (f) | Any other matter which may be prescribed |
Under sub-section (2), all persons so summoned are bound to attend in person or through authorised agents, as the Adjudicating Authority may direct, to state the truth upon any subject on which they are examined or make statements, and to produce such documents as may be required. Under sub-section (3), every proceeding under the section is deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860). The reader should check the current procedural and penal law for the corresponding provisions of the Code of Civil Procedure, 1908 and the Indian Penal Code.
Clause (f) leaves further matters to rules, and the text consulted gives none. The authority itself is described in our article on sections 6 and 7.
Section 11A: the place and the heading
Section 11A was inserted by Act 14 of 2019, section 27 (w.e.f. 25-07-2019), as the footnote prints. It is printed after section 11, at the end of Chapter III, although its subject belongs with the duties in Chapter IV. Its heading is printed in capitals, "Verification of Identity by Reporting Entity", in the text consulted.
If your business is a reporting entity and you want your client on-boarding steps read against this section, a legal consultation can help you map them. Our general guides on KYC requirements under PMLA and customer due diligence give wider overviews.
Sub-section (1): the four modes
Every reporting entity shall verify the identity of its clients and the beneficial owner by:
| Mode | Text |
|---|---|
| (a) | Authentication under the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (18 of 2016), if the reporting entity is a banking company |
| (b) | Offline verification under the same Act |
| (c) | Use of a passport issued under section 4 of the Passports Act, 1967 (15 of 1967) |
| (d) | Use of any other officially valid document or modes of identification as may be notified by the Central Government in this behalf |
"Reporting entity", "client" and "beneficial owner" are defined in section 2(1); see our article on the reporting entity definitions. The text does not list what is an "officially valid document" or which other modes are notified; that is for notification, and none is in the text consulted.
The two provisos
The first proviso says the Central Government may, if satisfied that a reporting entity other than a banking company complies with such the standards of privacy and security under the Aadhaar Act, 2016, and it is necessary and expedient to do so, by notification, permit such entity to perform authentication under clause (a). Printing slip: "complies with such the standards", with both "such" and "the". It is quoted as printed.
The second proviso says no notification under the first proviso shall be issued without consultation with the Unique Identification Authority of India, established under sub-section (1) of section 11 of the Aadhaar Act, 2016, and the appropriate regulator.
Sub-sections (2) to (5)
Sub-section (2): other modes must be offered. If a reporting entity performs authentication under clause (a), it shall make the other modes of identification under clauses (b), (c) and (d) also available to the client or beneficial owner.
Sub-section (3): voluntary choice. The use of the modes under sub-section (1) shall be a voluntary choice of every client or beneficial owner who is sought to be identified, and no client or beneficial owner shall be denied services for not having an Aadhaar number.
Sub-section (4): no storing. If authentication or offline verification under clause (a) or (b) is used, neither the core biometric information nor the Aadhaar number of the client or beneficial owner shall be stored.
Sub-section (5): further safeguards. Nothing in the section prevents the Central Government from notifying additional safeguards on any reporting entity in respect of verification of identity.
Explanation. "Aadhaar number" and "core biometric information" have the same meanings as assigned to them in clauses (a) and (j) of section 2 of the Aadhaar Act, 2016. The reader should check the current law on the Aadhaar Act, 2016 for the corresponding provisions.
How it fits with the duties in Chapter IV
Section 11A deals with verifying who the client is. The duties to maintain records of identity documents, and to keep them for the period stated, sit in section 12. The Director's power to call for records under section 11A is in section 12A. Enhanced due diligence for specified transactions, including Aadhaar-based verification before the transaction, is in section 12AA.
Reading these together, the identity record created under section 11A is the one section 12(1)(e) requires the reporting entity to maintain and section 12A allows the Director to call for. The text says nothing about the form in which verification is recorded; that is left to rules and notifications outside the text consulted.
An illustration
The names are invented. Rapid Capital Services Ltd is a reporting entity but not a banking company. Mr Vivek Menon wishes to open an account and offers his passport. Under section 11A(1)(c), the passport is a permitted mode. The company cannot refuse him for lacking an Aadhaar number (sub-section (3)). If the company were permitted by notification to perform Aadhaar authentication and Mr Menon chose it, the company would still have to offer the other modes (sub-section (2)), and it could not store his Aadhaar number or core biometric information (sub-section (4)).
Need help with client identification processes?
Section 11A sets limits as well as duties: voluntary choice, other modes to be offered and no storing of certain data. If you want your on-boarding procedure checked against the text, speak to us through legal consultation.
Key takeaways
- A reporting entity must verify the identity of its clients and the beneficial owner by one of the modes in section 11A(1).
- Aadhaar authentication is a mode for a banking company; other reporting entities need a notification under the first proviso.
- Offline verification, a passport and any other officially valid document or mode notified by the Central Government are also modes.
- The client's use of these modes is a voluntary choice, and no one may be denied services for not having an Aadhaar number.
- Neither the core biometric information nor the Aadhaar number may be stored when authentication or offline verification is used.
- Section 11 gives the Adjudicating Authority civil-court powers on discovery, attendance, production of records, affidavits, commissions and prescribed matters.
Read next
- Section 12: reporting entity to maintain records
- Section 12AA: enhanced due diligence for specified transactions
- Reporting entity, financial institution, intermediary and beneficial owner defined
- KYC Requirements Under PMLA: CDD and EDD
Disclaimer: Based on the consolidated text of the Prevention of Money-laundering Act, 2002 published by the Enforcement Directorate, showing amendments up to Act 23 of 2019 (1 August 2019), and on the Department of Revenue consolidated copy of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 listing amendments up to 19 July 2024, as consulted on 2 October 2026. Later amendments, notifications, other rules and regulator directions should be checked. This article is general information, not legal advice; check the official text before acting.