DBT and Aadhaar - Issues with Seeding/Mapping: Guest Post by Y P Issar

Posted on March 26, 2013 by Sumita Kale

Under Direct Benefit Transfer(DBT) Scheme,the government proposes to transfer subsidies to the deposit accounts of beneficiaries in the banksThese accounts are required to have recorded in their Core Banking Solution account data base the Aadhaar numbers(unique identity numbers given on behalf of government of India) so that the money can directly reach these accounts through a central processThis  process of recording  is called seeding of Aadhaar numbers by banks

The government concern for coverage of larger number of beneficiaries in a short time has lead to certain shortcuts in Aadhaar Seeding  which need to be examined for their  long term impacts.

UIDAI on its home page provides an Approach Document for Aadhaar Seeding in Service Delivery Databases version 1.0 which explains the concept and approach for this activity and is also quoted by Planning Commission Office Memorandum on DBT.

According to UIDAI, Aadhaar Seeding is expected to be undertaken mainly by contacting the account holders, obtaining of  the Aadhaar numbers and then entering it in bank data server( called organic seeding)UIDAI further suggests that this seeding should be test checked  through authentication process with their CIDR by sending details online and getting confirmations(well explained in appendix in UIDAI document).

UIDAI has also suggested direct seeding of bank accounts/ data bases by importing Aadhaar from their Central depository.

Planning Commission OM states that the concerned government departments will prepare digitised lists of beneficiaries with the details  of name,bank account number, Aadhaar number etc, forward these to banks  who  will seed their CBS server with Aadhaar number from this data baseThus, the responsibility for correct seeding of beneficiaries data bases  with Aadhaar rests with the government departments.


Under  DBT, banks have made provision for entering Aadhhar in the account details and are relying on the government lists to do soHowever, they are not verifying this from UIDAI CIDRIt will be preferable if bank branches are enabled to be capable of authentication by providing necessary biometric readers, software and  connectivityThis is also required if Aadhaar is to be accepted as Know Your Customer (KYC) by the banks directly.

It can  also be considered if Aadhaar seeding based on DBT lists received from the department ( without verification at bank level) and aadhaar entered as a KYC source are entered separately in CBS data base.

UIDAI allows access to its CIDR for authentication of demographic and biometric details to Authentication User Agencies(AUA) through Authentication Service Agencies(ASA) and enters into  detailed agreements with themSome major banks are  not AUA and hence can't access CIDRUIDAI primary concern, in providing standards for authentication, seems to be the responsibilities involved in verification of identities from CIDR during the financial transactions such as withdrawal or transfer of funds.

However authentication for the limited purpose of seeding of Aadhaar or as KYC source need to  be provided by UIDAI as a public service to all banks /government departments seeding Aadhaar without any restrictions or charges(present or in future).

Authentication standards/ conditions for financial transactions purposes can be dealt with separately if UIDAI has a definite case for the same.

Under DBT, as the beneficiary databases are to be seeded by government departments  with Aadhaar numbers as per government directives, they should be fully responsible for  correctness of the seeding exercise which may be termed Primary Seeding .  The recording of Aadhaar numbers in account details by banks may be treated as Secondary Seeding  equal to mere recording the facts.

However if banks undertake organic seeding  themselves  directly from the customer, then it may be Primary  Seeding with all attendant responsibilities for following UIDAI prescribed guidelines, even undertaking sample testing as proposed.

Finally, accounts with Aadhaar numbers seeded in them are to be mapped with National Payments Corp of India( NPCI).  Mapping refers to the mapping of the IIN number of the banks with Aadhaar number of the customersNPCI document on mapping states that the beneficiaries' consent need to held on record to do soWe need to allow this under DBT scheme on regular basis through an official fiatIn other cases, the banks may follow NPCI guidelines and obtain consent.

These  issues relating to seeding and mapping of Aadhaar numbers with bank accounts  need to be examined in detail by all concerned like UIDAI, NPCI, Banks and finally the government departments (especially planing commission DCT dept) and a uniform clear  approach needs to be adopted so that  DBT smoothly moves on from pilot to regular mode.

* Y P ISSAR is Ex GM FI of a nationalised bankThese are his personal views.

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Case Studies on Aadhaar enabled DBT

Posted on March 12, 2013 by Sumita Kale

While there has been ample discussion and debate in the media on DBT, there is very little ground level evidence to understand the practical issues in disbursing government payments on such a massive scaleMicroSave has undertaken detailed case studies in Aurangabad and East Godavari districts to identify the challenges and the best practices being followedAn issue raised is that there are significant variations across districts in: (a) the level of maturity and automation, both within the state or the district, and within the specific beneficiary programmes; and (b) the motivation and ownership of the officials driving the programmesFinally leadership that makes for effective organisation of the tasks and processes involved is the key to making this scheme a success.  

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Women and financial inclusion

Posted on March 11, 2013 by Sumita Kale

A post by Shweta Banerjee on the CGAP blog describes her experiences during a visit to Pilkhi, a village in BiharMost transactions at the village CSP counter, run by SBI, are by women withdrawing remittances from male family members in the citiesThe trust levels in keeping the money in the bank account are low and cash is still preferred.

She also talks of the experiences of women receiving old age pensions from the government, the time and effort it takes to access the post office, the frustration of finding out the money has not been credited etcThese women would benefit a lot if the pensions were disbursed at the kiosk, at a higher frequency than the current half-yearly scheme.

As reported by her, the GSMA report on Women and Mobile Financial Services in Emerging Markets points out that women can drive rapid adoption of financial servicesBut for this it is vital to win and retain their trustUnfortunately, little has been done to understand the needs of women, their financial lives...and there are huge rewards for financial inclusion once that happens!


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Budget 2013-14 and Financial Inclusion: Guest Post by Mr. Y P Issar

Posted on March 06, 2013 by Sumita Kale

The Central Government current budget is likely to adversely impact financial inclusion efforts in the country as it removes the emphasis the last two year budgets had on the coverage of villages with banking services especially through Business Correspondents(BC).

Last two year budgets had brought the coverage for villages with population up to 1600 (even up to  1000 in many states)In the action taken report, the government mentions that under the Swaabhiman Campaign, 74314 habitations with population up to 2000 and above stand covered and the guidelines have been issued for remaining  coverage and thus the action has been completed.

Without any mention in budget, the fate of the concept of Ultra small branches also remains unknown.

The Government  has also not announced in the Budget the important concept of Sub Service Area (SSA) under which all  service area villages/ Gram Panchayats are to be clubbed in to SSAs covering 1000 to 1500 households which should be serviced either by a bank branch or a business correspondent.

This concept has been introduced by DFS in Dec 2012 and is being followed by the banks in rolling out the BC coverage planSSA concept is also applicable to the urban centres where the wards are also being allocated amongst the bank branchesRBI is yet to endorse this concept.

The government appears to be totally concentrating on the Direct Benefit Transfer(DBT) programme and expects the banks to ensure that the declared districts have the banking means for disbursements of funds to beneficiaries- through bank branches, ATMs or BCs without any specific preference.

RBI has  however already  got the business plans of the banks for coverage of  villages with population below 2000 through banking channels (including BCs) from the State Level Bankers Committees routeWith the Financial Inclusion Plans for next three years under preparation by banks, RBI seems to be gearing fully for strengthening the next financial inclusion drive in the country, with special focus on covering over 6 lakh villages.

Focus on financial inclusion is clearly shifting back to RBI with the budget just leaving the field open with only an announcement that BCs can sell micro insurance products.


NOTE: The author, MrY P Issar is Ex-GM for Financial Inclusion at a Nationalized Bank. Rights of contents of the post rest with the author.

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Budget and Direct Benefit Transfer(DBT): Guest Post by Mr. Y P Issar

Posted on March 06, 2013 by Sumita Kale

DBT for the next financial year has been proposed in a very subdued manner when the FM simply states in the Budget that it will be rolled out across the country during the UPA government term itself that is by 31.3.14 perhaps.

During the last year budget speech, then FM had said that it will the endeavour to scale up(earlier pilots) and roll out these  Aadhaar enabled payments for various government schemes in at least 50 selected districts within next six  months.(para24/25 of Budget speech 2012)

Presently  FM says  that we shall be redoubling our efforts to ensure that digitised lists are available,that a bank account is opened for each beneficiary and that the bank account is seeded with Aadhaar in due course.(para114 of Budget speech2013)

During the implementation during the current financial year, FM has shown great sagacity in lowering the expectations from this programme after personally going to great lengths in gathering grassroots level feedback and listening to senior bankersThis has brought out various micro issues to the fore say mapping of Aadhaar  with NPCI mapper for proper crediting of the accounts.

Two issues need attentionFirstly, the banks have been told by DFS to seed the accounts with Aadhaar number as provided by the lists prepared by the departments concernedWhile these instructions are being complied with, the correctness of this number is not being tested by bankersIf Aadhaar is to be accepted as provided and more so if it is to treated as a full KYC, all bank branches need to be capable of testing aadhaar from UIDAI data baseThis service must be delinked from the AEPS suite and become mandatory.

Secondly, NPCI mapping instructions say that an authority from the beneficiary need to be obtained before mapping which is not being complied with at presentDFS need to resolve this issue.

FM's mature handling of the subject  and also the low key rollout has won him many friends in the banking industry who do not feel rushed throughA stable and phased  roll out will win Government lot of goodwill till Aadhaar coverage is much better.


NOTE: The author, MrY P Issar is Ex-GM for Financial Inclusion at a Nationalized Bank. Rights of contents of the post rest with the author.

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