Bankers, Nilekani to discuss financial inclusion

The Reserve Bank of India (RBI) will soon convene a meeting of bankers to discuss ways to boost financial inclusion by using the unique identification project, commissioned by the government.

Sources said bank chiefs would discuss the challenges of taking the UID project ahead by accessing the data available with the branch network (for corroborate identity). Bank branches have extensive nationwide data about their customers. Unique identity envisages authentication — “Are you who you claim to be?

The UID Authority of India (UIDAI), headed by Nandan Nilekani, would combine databases of multiple agencies for corroboration. It will issue numbers and not cards.

At the meeting, to be attended by chiefs of commercial banks, including State bank of India and ICICI Bank, banks are expected to give the status of financial inclusion initiatives, including technological preparations and cost estimates. Banks chiefs may point to the some of the problems that they face in working on the financial inclusion programme.

The UIDAI would combine databases of multiple agencies including banks for corroboration process. Getting UID number does not guarantee rights or entitlements. UID intends to enhance access to services and enable direct benefit to poor.

It is also expected to reduce frauds pertaining to identity and also strengthen security, according to UIDAI presentation. The authority is expected to publish standards and protocols in next few months for making banks UID ready.

RBI has maintained that the potential of the UID was huge. It will be a powerful instrument for helping poor people to establish their identity for banks’ Know Your Customer (KYC) norms.

This is going to reduce cash and non-cash transaction costs both to the banks and to the potential customers. The UID is another powerful illustration of harnessing technology to the benefit of the poor.