April 2017

Aadhaar: Empowering The Common Man Digitally

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More than 111 crore people have enrolled in the Aadhaar system. Even a person who doesn’t have smartphone, debit cards, and credit cards can make use of their Aadhaar number as their social identity, says Sanjay Chahande, Deputy Director General of Unique Identification Authority of India (UIDAI) in conversation with Elets News Network (ENN).

Sanjay Chahande
Deputy Director General
Unique Identification Authority of India
(UIDAI)

What is the idea behind Aadhaar payment app which was recently launched?

More than 10 crore people are using the Aadhaar app. Aadhaar is a unique identity document which empowers citizens. It is a form of digital identity which gets recorded with the central government. It is being used in many government schemes including Pradhan Mantri Jan Dhan Yojana (PMJDY), bank accounts, etc, both in rural and urban areas. It is being actively used for opening new accounts. Aadhaar also helps in linking all the accounts making it as one financial identity or financial address for a citizen.

“Andhra pradesh is implementing Aadhaar with the Electronic Point of Sale (e-PoS) machines. Any beneficiary coming to a ration shop is identified through his Aadhaar number.”

Aadhaar makes it easy to link internet banking transactions with Financial Payment Corporation of India (FPCI). With Aadhaar and FPCI integrating, a new dimension has come into the inter-banking system. Everything is primarily linked to fundamental systems where Adhaar is playing a key role. It’s a payment bridge involved in Direct Benefit Transfer (DBT) scheme. It means government is giving subsidies or benefits by transferring it directly to the beneficiary account instead of passing through a number of stages and channels. LPG subsidiary has been successful only due to the Aadhaar

An advertisement pitching for use of digital identity offered by UIDAI

It’s a payment bridge involved in Direct Benefit Transfer (DBT) scheme. It means government is giving subsidies or benefits by transferring it directly to the beneficiary account instead of passing through a number of stages and channels. LPG subsidiary has been successful only due to the Aadhaar payment bridge. Aadhaar validates the beneficiaries list. Aadhaar Enabled Payment Systems (AEPS) also have certain dimensions. For this, we have to understand the reach of banks in almost six lakh villages. Sometimes, people are not able to reach their banks due to some physical constraints. For example, National Rural Employment Guarantee Act (NREGA) workers wages are distributed through Aadhaar enabled process. Banking correspondents are using Aadhaar as a bridge to open bank accounts in rural areas.

How has BHIM app been able to differentiate itself over the other existing app which are already there in the market?

A wallet is a two way communication between the private wallet and banks. But Aadhaar is catering to a segment which nobody is looking at right now. A person who doesn’t have anything in terms of smartphones, debit cards, credit cards, people who don’t know how to open a bank account themselves can make use of their Aadhaar number as a social identity. This is the kind of reach Aadhaar enjoys. Secondly, a person having Aadhaar number doesn’t have to bear the cost of carrying a smartphone, credit and debit cards.

Aadhar is a unique digital identity that is increasingly being used by the government to
directly transfer money to accounts of beneficiaries under government schemes

What is next for Aadhaar in India?

Through Aadhaar we have created an architecture. We would like to facilitate its use and help other to integrate it with their systems. We are there to assist anybody who comes forward to integrate it with their system. Like the Securities and Exchange Board of India (SEBI) wanted to use it in the mutual Fund sector. They came to us with all the Electronic Know Your Customer (eKYC), paper based documents and we helped them use Aadhaar within their process. With our Aadhaar act, we would like to use it in different schemes and government services. For example, Andhra pradesh (AP) is implementing Aadhaar with the Electronic Point of Sale (e-PoS) machines. Any beneficiary coming to a ration shop is identified through his Aadhaar number. One of the districts in AP, came out with the idea that even with the same authentication, a villager doesn’t need to pay to the ration shop. It is cashless in the sense that money will be transferred from beneficiary account to the ration shop owner’s account by making use of Aadhaar. It kills the need of ATMs or credit and debit cards.

Reserve Bank of India has issued an advisory whereby all the ATMs need to be Aadhaar enabled. It will take some time but definitely one day it will become a reality. Aadhaar enabled ATMs would be a norm soon and then we will be able to reach even the remotest areas of the country. We don’t require any kind of 4G connectivity, our system even works on the 2G network. I think Aadhaar has a great potential to benefit people in every sense.

Do you think there will be more transparency with increasing number of online financial transactions. How else will it benefit the citizens?

First of all, DBT is moving at a great pace. People are using Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) transfer more. Now with Aadhaar payment bridge all of them have become interconnected. More and more departments have started using Aadhaar and more and more bank accounts are using it for seamless transactions. Aadhaar is enabling merchant transactions in a big way.

 

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