FINANCIAL INCLUSION- NEWS AND VIEWS - OCTOBER 2018
On September 26th, the Supreme Court finally came out with its verdict on Aadhaar, a much-awaited judgement, with petitions pending for over six years. The 1448 page document has upheld the constitutional validity of Aadhaar, but put restrictions on its use (Bloomberg Quint, September 26, 2018). While Aadhaar can be used for delivery of government benefits, the number cannot be mandatory for opening bank accounts, mobile - phone connections etc. (Mint, September 27, 2018). By striking down Section 57, it is unclear whether private companies (fintech, banks etc.) can use e - KYC as a voluntary option for customers. As e - KYC is much cheaper than paper - based KYC, this will impact the financial inclusion mission to spread low cost banking and financial services across India.
Going ahead, the judgement has given the customer rights to his data, but we still need a privacy law and data sharing protocols. Further, under DBT, where Aadhaar has been allowed, it is important for the government to focus on implementation glitches, address exclusion errors honestly and give beneficiaries a seamless transfer and transparent grievance redressal. The MicroSave study in Uttar Pradesh tracking DBT of in-kind benefits to elementary school and secondary school students gives excellent insights on addressing issues in delivery, preferences of beneficiaries and the grievance mechanism.