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Features of UID-based financial inclusion
• Rs. 100 incentive for BPL residents (13th FC)
• UID KYR is sufficient KYC for no-frills accounts
• Bank account for every resident
• Secure way to access bank account with UID auth
UID Auth Bank account
Rs. 100 incentive
KYR = KYC
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Ram’s efforts to collect his NREGA dues
6 km walk to bus stop
Ram’s Thursday ordeal
14 km bus journey
2 hour wait at the bank and a frustrated bank clerk
2:30pm deadline
The return journey
Moneylender dues @ 5% pm
Ration from village kirana with remaining money
Ram’s trade-off for his wages
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Rs 546
Rs 10 Transport
Rs 25 Interest cost
Rs 91 Opportunity cost of wasted day
Rs 126 Total cost> 20% of income
Rs 546
Rs Zero ‘Processing fee’
The cost to the poor of ‘last mile’ financial distance
Central Schemes Estimated spend ( Rs crores)*
NREGA 37,779Sarva Shiksha Abhiyaan (SSA) 11,934JSY + ASHA 1,400Indira Awaas Yojana 8,795National Old Age + widow + disability pensions 4,000Total across above schemes 63,908
Food, Fertilizer and Fuel subsidy 95,579
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@ 10% cost,
> 6,000crs
UID, Fingerprint,
Amount
Ram hands cash to BC
Ram credit, BC debit
Confirmation receipt, SMS
Beginning Balance
BeginningCash
EndingBalance
EndingCash
Ram Rs.100 Rs.50 Rs.150 Rs.0
BC Rs.1,000 Rs.1,000 Rs.950 Rs.1,050
Deposit cash at MicroATMRam BC with a microATMDeposit Rs.50
Receipt
UID, Fingerprint,
Amount
Ram receives cash from BC
Ram debit, BC credit
Confirmation receipt, SMS
Beginning Balance
BeginningCash
EndingBalance
EndingCash
Ram Rs.100 Rs.0 Rs.50 Rs.50
BC Rs.1,000 Rs.1,000 Rs.1,050 Rs.950
Withdraw cash at MicroATMRam BC with a microATMWithdraw Rs.50
Receipt
NREGA wages: UID enabled direct transfer
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Muster roll with Ram’s UID
GP NREGA
Block NREGA
PIA bank a/c
UID enabledResident no -frills bank a/c – existing or new
Central switch at NPCI
Authentiction
Resident - RamUID 2563 8564 4663
Transfer money From NREGA a/cTo UID 2653 8564 4663Amount Rs546
Debit NREGA a/cCredit Ram’s a/c
Info
IVRS/ SMS
4. Authenticate and execute
2. Money transfer instruction + biometrics
Convenient cash withdrawal
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Resident - RamUID 2563 8564 4663
BC (Kirana, SHG, PO etc))With Micro-ATMUID: 7233 5968 3094
TransferMoneyFrom UID 2653 8564 4663To UID 7233 5968 3094Amount 300
Ram’s bank a/c
BC’s bank a/c
NPCI switch
Authentication
1. Withdrawal request
3.NPCI request
6. Debit
7. Credit
8. Info- IVRS/ SMS
9. Cash
Common technology infrastructure across customer service points
Bank branches 70,000 today
85,000 by 2013ATMs
45,000 today100,000 by 2013
POS terminals500,000 today
1,000,000 by 2013
MicroATMs1,500,000 by 2013
Mobile, internet, phone bankingAny where, any time access
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Innovations from the lower end can migrateto the higher end.Example: cash transfers
Innovations from the higher end can migrateto the lower end.Example: railway tickets
Technology can be used to drive inclusionSolutions lower in the pyramid are more inclusive
Multiple smartcardsHigh cost, high complexity, low flexibilty
Ram
NREGA
Pensions
IAY
RSBY
• Expensive and Duplicate H/W, S/W & Infrastructure for Govt.• Duplicate records and lack of integrated MIS and monitoring
Backend Assisted/Device Resident
NOAPS
Confusing array of cards and A/Cs
AAD
HAA
R in
fra
Ram
AADHAR linked backend and authentication system
• Unified Identity verification via AADHAR
• Unified backend via AADHAR• Applications Residing entirely at the
backend/on the cloud
• Unified Access via connected terminal and/or mobile
• Device only authenticates, therefore much cheaper, simple • No Smart Card
• AADHAR Linked Bank Account
• AADHAR Linked Mobile Phone
Common application
infrastructure
PDS
NREGA
RSBY
Online AADHAR Authentication & application
ResidentBackend Assisted/Device
Online “virtual card” + mobile self serviceLeast cost, reduced complexity, high flexibility
Increased Access via Mobile Self ServiceEnhanced flexibility and empowerment to residentsReduced Cost and Complexity
Aadhaar enabled Offline vs Online solution
Issues Offline OnlineAddresses duplicate records Information Resides in “smartcard” Resides in “smart cloud”
Business application Resides in the device Resides online in the backend cloud
Device Complex, expensive Simple, inexpensive
Interoperable Real-time Multi-modal Can work without connectivity
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
www.uidai.gov.in
Thank You
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