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UID and Financial Inclusion

UID and Financial Inclusion. UID Authority of India www.uidai.gov.in. Features of UID-based financial inclusion. Ram’s efforts to collect his NREGA dues. 2:30pm deadline. 2 hour wait at the bank and a frustrated bank clerk. The return journey. 14 km bus journey. 6 km walk to bus stop.

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UID and Financial Inclusion

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  1. UID and Financial Inclusion UID Authority of India www.uidai.gov.in

  2. Features of UID-based financial inclusion

  3. Ram’s efforts to collect his NREGA dues 2:30pm deadline 2 hour wait at the bank and a frustrated bank clerk The return journey 14 km bus journey 6 km walk to bus stop Moneylender dues @ 5% pm Ration from village kirana with remaining money Ram’s Thursday ordeal

  4. Ram’s trade-off for his wages Rs 10 Transport Rs 25 Interest cost Rs 91 Opportunity cost of wasted day Rs 546 Rs Zero ‘Processing fee’ Rs 546 Rs 126 Total cost > 20% of income

  5. The cost to the poor of ‘last mile’ financial distance @ 10% cost, > 6,000crs

  6. Deposit cash at MicroATM Deposit Rs.50 Ram BC with a microATM Receipt

  7. Withdraw cash at MicroATM Withdraw Rs.50 Ram BC with a microATM Receipt

  8. NREGA wages: UID enabled direct transfer Transfer money From NREGA a/c To UID 2653 8564 4663 Amount Rs546 Block NREGA Central switch at NPCI PIA bank a/c Authentiction GP NREGA Debit NREGA a/c Credit Ram’s a/c Resident - Ram UID 2563 8564 4663 UID enabled Resident no -frills bank a/c – existing or new Info IVRS/ SMS Muster roll with Ram’s UID

  9. Convenient cash withdrawal Authentication Resident - Ram UID 2563 8564 4663 8. Info- IVRS/ SMS 6. Debit 4. Authenticate and execute Ram’s bank a/c NPCI switch 1. Withdrawal request 9. Cash 7. Credit TransferMoney From UID 2653 8564 4663 To UID 7233 5968 3094 Amount 300 3.NPCI request 2. Money transfer instruction + biometrics BC (Kirana, SHG, PO etc)) With Micro-ATM UID: 7233 5968 3094 BC’s bank a/c

  10. Common technology infrastructure across customer service points Innovations from the lower end can migrate to the higher end. Example: cash transfers Innovations from the higher end can migrate to the lower end. Example: railway tickets Technology can be used to drive inclusion Solutions lower in the pyramid are more inclusive

  11. Multiple smartcardsHigh cost, high complexity, low flexibilty Backend Assisted/Device Resident NREGA AADHAAR infra Pensions Ram NOAPS IAY Confusing array of cards and A/Cs RSBY • Expensive and Duplicate H/W, S/W & Infrastructure for Govt. • Duplicate records and lack of integrated MIS and monitoring

  12. Online “virtual card” + mobile self serviceLeast cost, reduced complexity, high flexibility Backend Assisted/Device Resident AADHAR linked backend and authentication system Ram PDS Common application infrastructure NREGA Online AADHAR Authentication & application RSBY • Unified Access via connected terminal and/or mobile • Device only authenticates, therefore much cheaper, simple • Unified Identity verification via AADHAR • Unified backend via AADHAR • Applications Residing entirely at the backend/on the cloud • No Smart Card • AADHAR Linked Bank Account • AADHAR Linked Mobile Phone • Increased Access via Mobile Self Service • Enhanced flexibility and empowerment to residents • Reduced Cost and Complexity

  13. Aadhaar enabled Offline vs Online solution

  14. www.uidai.gov.in Financial Sector • Banking • Lower KYC costs • Low transaction costs • Increased reach, new revenue models • Insurance • Micro-insurance • Fraud prevention for life insurance • Securities • Reliable and low cost KYC • Micro-Gold ETFs • Micro – Money Market Mutual Funds

  15. Thank You

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