About AADHAR: The Unique Identification Authority of India (UIDAI)
was established by Government of India with an objective to implement Multipurpose
National Identity Card or Unique Identification Card (UID Card)in India.
This project is part of the Planning
Commission and headed by Mr. Nandan Nilekani, a former
co-chairman of Infosys Technologies.
A budget of `3000 crores is allotted for implementation of the ambitious project
with an objective to cover 60 crore residents by 2014
It is aimed to issue a unique identification number
to all Indian residents with intent:
i. to eliminate duplicate/fake identities
ii. to put hassle-free, cost effective
verification/authentication system in place thereby
iii. to save considerable resources of various User
Departments as well as beneficiaries at large.
Basics of
UID (AADHAR)
i. It
will be a randomly generated twelve
digit number for every resident of India. Example:2653 8564 4663.
ii.
The number will be
unique, which means, no two residents will have the same number.
iii. No resident can have two numbers
because AADHAAR is based on a combination of standard information like name,
address, age and biometric information which is unique to every person.
iv. AADHAR will be used to prove identity not citizenship.
v.
It will not be
compulsory to get an AADHAAR number
Benefits to the users:
1. The AADHAAR will become the single
source of identity verification.
Once residents enroll, they can use the number multiple times.
2. The large number of residents, who
currently don’t have any identity documents and are therefore ‘excluded’ from beneficiary lists, can also
get an ‘identity’ through the' Introducer' system.
Role of AADHAAR in
Banking System:
Aadhaar
Enabled Payment System or AePS is an Indian payment
system developed by National
Payments Corporation of India. Its working is based
on unique identification number for individuals called Aadhaar.
The
system allows an Aadhaar-holder to carry out financial transaction on a micro-ATM provided
by the banking correspondent. It is an initiative towards providing improved
social security benefits and financial inclusion of the under-privileged people.
AADHAAR Project - Role of Banks: Public
Sector Banks already started entering MOU with UIDAI to act as Registrars for
AADHAAR project. Banks are likely to play beyond the role of enrolling agents.
1. KYC
compliance: Today,
the major constraints faced by the banks while opening of accounts is the
absence of valid identity and address proof of the prospective customers and it
is causing inconvenience to the public and operational problems to the banks
thereby unable to achieve the desired financial inclusion.
Once the
project comes to live, AADHAAR number may be treated as substitute for KYC
compliance which enables the banks to open
accounts with a greater speed and accuracy besides saving of considerable
resources.
2. Micro
ATMs: As a step
towards financial inclusion, RBI has allowed banks to engage intermediaries
i.e. Business Correspondents (BC) to carry out specified financial transactions
through Public Call Office operators, Kirana Stores, Medical Shop owners and
Fair Price Shop dealers etc.
The
intermediaries would be provided mobile phone and fingerprint reader and would
act as a Micro ATM where a person could go to any BC across the country to
withdraw/deposit money.
AADHAAR
could emerge as a payment card linked to a savings account and function as a pre-paid / smart card where the
government credits the amount to the accounts directly.
On
implementation of the project, banks would have immediate access to many more
potential customers at the bottom of the pyramid through Branchless
Banking; however, this requires substantial investment in
technology.
What are Micro ATMS? Micro-ATMs are biometric authentication
enabled hand-held device (also known as a Point of Transaction [PoT] terminal) .
Micro-ATMs will primarily perform
following functions:
1. Cash withdrawal
2. Cash deposit
3. Balance enquiry
4. Remittances
Note: i.
These devices will be operated by the Business Correspondents (BCs)
appointed by the banks.
ii. The physical currency would be handled by this BC and not
a machine like a regular ATM.
iii. All transactions will require online biometric
authentication with the UIDAI authentication server in order to be processed.
3. Mobile
Banking: The
Aadhaar project enables the mobile industry to create a Low-Cost High-Volume
ubiquitous transaction platform to penetrate into remote rural areas of the
country.
Under this
every transaction point will have a mobile phone and a fingerprint reader. The
resident having Aadhaar number simply walk in to any point and complete his
financial transaction with ease since the service provider gets the
authentication from UID online.
Advantages:
1. Brings down the costs of cash management for banks.
2. Supports physical cash transactions at the local level.
3. Substantially reduces the risk to the bank, since the cash transacted at the local level is
already paid-up by the BC (Business Correspondents).
Once this
model is stabilized, the distribution of financial products and services can be
opened up to whoever is willing to invest in a mobile phone and a fingerprint
reader. Millions of financial correspondents could be enrolled. The AADHAAR
platform enables the banks to provide Virtual Banking.
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