New Delhi: India will see at least five million bank accounts being opened in the next two to three months, mostly in rural areas, thanks to the government’s ambitious Unique Identification (UID) or the Aadhaar programme, according to Ashok Pal Singh, deputy director general, Unique Identification Authority of India (UIDAI).
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The programme, which gives out unique 12-digit UID numbers and maintains a database of the personal details of individuals, including biometric information, has thus far given out 6.58 million numbers. While enrolling people, one option it gives them is to open a bank account to which the UID number will be linked.
The UIDAI has empanelled a total of 64 banks of which 25 are state-owned banks, 12 private banks and one foreign bank. The rest are regional rural banks and cooperative banks. These banks—State Bank of India, ICICI Bank Ltd and Citibank are among them—will be given access to data of customers who have enrolled for Aadhaar and want to open a bank account.
According to Singh, around 80-85% of the people so far enrolled by UIDAI don’t have a bank account and have asked for one. According to the Reserve Bank of India data, only 40% of the country’s population has access to banking facilities. Singh and another UIDAI official, who also did not want to be named, said the banks would have to open the accounts within the next two to three months.
“Once the data is shared with the banks, they will have to open the accounts within one month,” said Singh.
A senior official from State Bank of India said the bank will be able to open accounts within the stipulated time frame. “We already open bank accounts in rural areas through our own branches. The only difference will be that volume of accounts will be higher when opened through Aadhaar. But we should be able to manage it using a mix of our branches and banking correspondents,” he said.
Aadhaar-linked bank accounts assume significance also because the government has set up a committee to look at the issue of direct transfers of subsidies and benefits. The committee is headed by UIDAI chairman Nandan Nilekani and is expected to submit its report by June. Indeed, UIDAI told the banks it was empanelling that their systems should facilitate direct transfers to the accounts of beneficiaries. “Apart from the clear benefits from the cash transfers of subsidy, Aadhaar-enabled bank accounts will bring large masses of people into the net of banking services; banks were earlier incapable of doing so (opening accounts) for the want of proper documentation,” said Sunil Chandiramani, partner and national leader, government services, at audit and consulting firm Ernst and Young, an adviser to the project. His reference is to so-called KYC, or know your customer norms that banks need to follow while opening an account. The government has since mandated that an Aadhaar number will suffice.
The Reserve Bank of India (RBI) has said that banks will have to cover villages with a population of 2,000 and above by March 2012; this adds up to around 73,000 villages.
It asked banks to cover 20,000 villages in 2010-11 and the remaining 53,000 villages in 2011-12. In 2010-11, the banks covered 29,000 such villages.
People opting for a bank account while enrolling with UIDAI may not always be able to choose the bank that serves them. If a bank adopts a village under RBI’s financial inclusion plan or only one bank is empanelled in that area, then that is the bank that will serve customers in that area. In other areas, customers can choose between banks which are empanelled for that particular district.