By Andrew MacAskill and Bibhudatta Pradhan - Jun 30, 2011 10:30 AM ET
Indian lenders such as ICICI Bank Ltd. (ICICIBC) and State Bank of India will be the first companies granted access to the largest personal identity program in history, a database of up to a billion people that promises to revolutionize business.
About 64 banks will open accounts in a few months based on details entered in the government’s burgeoning biometric data store, the project’s leader, billionaire entrepreneur Nandan Nilekani, 56, said. India initially aims to hand identification numbers to 600 million people by 2014, enabling access to financial services for those who don’t have birth certificates, utility bills or passports.
“This is a game changer,” Nilekani, a co-founder of Infosys Technologies Ltd. (INFO), said of the identity plan in a June 28 interview at his New Delhi office. “This could lead to a wave of innovation with people building applications that we can’t even dream about.” Entrepreneurs last week showed Nilekani plans to create a secure online “vault” for personal files such as education certificates, ending the need to carry them around, and a system for college payments.
About 47 percent of Indians don’t have a bank account, according to a study Boston Consulting Group and the Confederation of Indian Industry published this year. In rural areas, the problems are even greater: 70 percent of villagers don’t have a bank account and 85 percent are without credit.
Representatives of ICICI and State Bank of India did not immediately respond to phone calls and e-mails requesting comment.
Friedman Inspiration
Insurance and phone companies are also making products compatible with the store of data, which can be used for free until 2013, Nilekani said.
The Unique Identification Authority of India he heads was conceived to help the poor benefit from social services through an ID number, and create a fraud-proof way of delivering subsidies, which account for about 10 percent of government spending or $30 billion.
Nilekani left his job with India’s second-largest software exporter when asked to head the project by Prime Minister Manmohan Singh in 2009. New York Times columnist Thomas Friedman says Nilekani inspired his 2005 bestseller
‘The World Is Flat’.
While Nilekani says there will be “enormous” opportunities for businesses to use the technology, he rejects the accusation that companies will be reaping the benefits from a taxpayer-funded project. He compares the venture to the government building a road used by the public and companies.
‘$18 Billion Saving’
‘$18 Billion Saving’
“Giving so many people an ID and including them in formal society, the social value of that is incalculable,” Nilekani said.
“This is soft infrastructure, which is equally important as roads and ports, it is about delivery of services.”
Nilekani also heads a task force on government plans to directly transfer cash to the poor to subsidize fertilizer and fuel costs. According to a McKinsey report in November, an electronic platform for government payments will save the government about $18 billion a year.
While Nilekani said his colleagues have the basic technology in place to collect every Indian citizen’s name, date of birth, gender, fingerprints and iris scans, they are still working on the problems of storing all this information.
“Accuracy and scale are the major problems,” he said. “ In any technology, when you scale it, you encounter challenges.”
To contact the reporters on this story: Andrew Macaskill in New Delhi at amacaskill@bloomberg.net; Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net
To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net