Sugata Ghosh & Sangita Mehta, ET Bureau Dec 19, 2014, 10.17AM IST
MUMBAI: Can the poor, illiterate, unbanked masses, unfamiliar with technology and multiple passwords, remember and key in the 4-digit PIN to withdraw money from ATMs and use the debit card that the Modi government wants banks to offer? Isn't it simpler for a customer to give her fingerprint on a biometric reader that's linked to the Aadhaar database, to prove that she is, indeed, the person she claims to be? Not really, say many bankers
Dirt and grime on fingers of labourers and farm workers may often block biometric recognition; even when fingerprints are recorded, transmitting the images will require more bandwidth and time; besides, if folks in remote, impoverished African villages can remember the PIN, why can't those in rural India, they counter — arguing 'why reinvent the wheel' and complicate a transaction when chip & PIN, a globally accepted technology, is already in place.
This old and simmering standoff, though not so apparent, between banks and the government — with the Reserve Bank of India occasionally striking a middle ground — had almost dissipated with the defeat of Congress and exit of Nandan Nilekani as the chairman of Unique Identification Authority of India, the agency that issues the 12-digit Aadhaar number.
But the subject has once again resurfaced in the wake of the Pradhan Mantri Jan Dhan Yojana — the financial inclusion programme that, among other things, envisages issue of debit cards to 75 million new bank accountholders.
The issue cropped up a fortnight ago, at a meeting of the Indian Banks' Association. It was suggested that banks will have to gradually change their systems and machines to enable biometric authentication for cards as well as ATM transactions.
"A large private bank has been asked to carry out a pilot project for biometric authentication while making payments through PoS (point of sales) terminals with merchant establishments... In the absence of a social security number, we appreciate the importance of Aadhaar and the government's decision to transfer direct benefits into Aadhaar-linked accounts. But why do you need biometric authentication for debit card and ATM transactions? An accountholder visiting a bank can show her Aadhaar card, which also has her picture printed on it, to withdraw money," a banker familiar with the recent discussions told ET.
Some of these objections were raised in the past, but banks found the team led by Nilekani — a highprofile technocrat with an immaculate track record and proximity to the Gandhis and RBI Governor Raghuram Rajan — rather invincible.
Today, they are faced with an equally formidable phenomenon: a nationalistic fervour wrapped around a 'Make in India' credo that backs local technology (like the biometric authentication) and noprofit local payments entity (like the National Payments Corporation of India).
While officials from the Indian Banks' Association insist that banks are "on the same page" with the government on Aadhaar, senior bankers, speaking on condition of anonymity, convey a different message.
"This would mean dual technology and dual cost — linking with the Aadhaar server for KYC as well as bank server for the fund source. It would mean reconfiguring the software and equipping all banks, branches, ATM and PoS terminals with biometric readers. It's just not the cost. That can be absorbed, but this is a technology which cannot be used by customers while they are travelling overseas where there is no system of biometric authentication for payments," said the technology head of a large bank.
The pilot project will indicate whether payments based on biometric authentication would catch on. If it does, it may be an effective way to popularise and push Aadhaar. But it may not go down well with many banks which will have to grudgingly execute a new technology — only a year after they migrated from the fraudprone magnetic strip cards to the comparatively safer chip-and-PIN cards.
