UIDAI to capitalise on financial inclusion plan

Getting rural India to register for Aadhaar, the unique identification number scheme, is going to be a rewarding experience for banks. 

Leveraging on the government’s financial inclusion agenda, the Unique Identification Authority of India (UIDAI) has decided to pay Rs 50 per enrolment to banks and Life Insurance Corporation of India, which are acting as its registrars, for signing up residents till March 2011. 

Besides, any person who is below the poverty line will be entitled to a payment of Rs 100 for registering for Aadhaar. 

In addition, banks are likely to get Rs 100 for every account that they open under the financial inclusion plan, for which they have been given specific branch opening targets in villages with a population of up to 2,000. 

The government had started taking keen interest in financial inclusion, which was originally being pushed by the Reserve Bank of India as part of its outreach programme. Now, it is UIDAI which has decided to ride piggyback on the plan to provide financial services across rural India. 

“This money will be given because the cost of collecting biometrics, photographs and the manpower comes to around Rs 30-40 per person. Moreover, banks will also have to cover rural areas as there is no benefit of such a scheme,” said a UID official. 

In his Budget speech, Finance Minister Pranab Mukherjee had announced the government’s intent to make available the benefits of banking services to the ‘aam aadmi’, and that appropriate banking facilities will be provided to habitations having population of more than 2,000 by March, 2012. 

“It is also proposed to extend insurance and other services to the targeted beneficiaries. These services will be provided using the Business Correspondent and other models with appropriate technology back up. By this arrangement, it is proposed to cover 60,000 habitations,” he had said. 

According to UIDAI’s estimates, currently there are around 600 million bank accounts in the country but only 200-250 million individuals have bank accounts since many have multiple accounts. This translates into just 20 per cent of the population having bank accounts. 

At present, the UIDAI has 17 bank registrars, including the country’s largest lender the State Bank of India, and 10 more banks will be roped in soon. The authority plans to issue Aadhaars to 600 million residents over the next four years, with a 100 million expected to be enrolled in the first year. 

To ensure that banks do not go on a registration spree and turn the incentive into a money spinner, UIDAI is building safeguards. So, banks will be paid only when an Aadhaar is generated and not for opening a new bank account. 

“The resident’s information, hence captured by the registrar, will be electronically sent to UIDAI, where the Aadhaar will be generated post the de-duplication process to ensure the person has not been issued an Aadhaar earlier,” the official explained. 

The bank can capture additional data according their requirements besides the mandatory information that the authority needs — name, date of birth, gender, guardian’s name and address in the case of demographic details and photograph, all 10 fingerprints and iris scans for biometrics.