Bankers say that the new government is likely to continue with Aadhaar.
Mayur Shetty, TNN | May 30, 2014, 06.33AM IST
MUMBAI: Bankers say that the new government is likely to continue with Aadhaar given the huge savings that it can bring by plugging leakages in subsidy payments and the support it provides to extending banking services to the unbanked.
According to a central banking source, using Aadhaar in direct benefit transfers has brought about huge savings in LPG subsidies through de-duplication of subscribers. The Aadhaar database was also helping financial service firms extend their reach to the unbanked as 'know your customer' norms could be completed without insisting on documents.
Speaking to TOI recently, Uday Kotak, vice-chairman and MD, Kotak Mahindra Bank, said that the government could retain Aadhaar in some form as it would facilitate extension of banking services. Another chief of a private bank said that even if the government tinkered with the scheme, it would still be advantageous to retain the Aadhaar brand as hundreds of crores has been spent on creating an awareness about the scheme in many states.
Aadhaar is used in the banking industry at three levels. As a financial inclusion tool, at the time of issuance of the number, citizens are allotted a bank account if they do not already have one. It also simplifies the process of account opening to those who already have an Aadhaar number. Some bank branches are already allowing walk-in customers to scan their fingerprints to capture address and identity proof from the central database and open an account. Some private insurance companies are looking at selling insurance across-the-counter with minimum personal information as the Aadhaar card is used to pull all customer information into their database. The government had originally intended to use Aadhaar to transfer government payments, including scholarships, and food and LPG subsidies directly into bank accounts. The Aadhaar bridge - an IT link provided by National Payment Corporation of India - connects the government treasury to the ultimate beneficiary's account.
Some BJP members were highly critical of Aadhaar. During the election campaign, BJP leader H N Ananth Kumar, who defeated former Unique Identification Authority of India chairman Nandan Nilekani, had claimed that the BJP would scrap the UIDAI and replace Aadhaar with the National Population Register. He had said that Aadhaar had no validity after the Supreme Court observations. The BJP had alleged that Aadhaar numbers were being allotted to non-citizens.