His statement addresses the concerns of many bankers who had feared that they did not have the infrastructure to creating bank accounts for millions of Aadhar number holders. The authorities of the Aadhar project, which is working to give a unique number to all Indian residents, see spread of banking as a major outcome of their effort.
Eighty per cent of the two million individuals, who have been enrolled for the unique Aadhar number so far, have requested for bank accounts, said Nilekani while addressing the Nasscom Leadership Forum 2011. The poor individuals find it difficult to open bank accounts as they are unable to meet the Know Your Customer (KYC) norms of the banks. Under KYC norms, banks are required to verify documents, which authenticate the identity of individuals, to prevent the misuse of bank accounts for money laundering, terrorism and other illegal activities.
The Finance ministry and RBI have recently notified that banks could open no-frill accounts for poor individuals with only Aadhar number, Nilekani noted. But he also said that of the estimated 70,000 bank branches in the country only 6 per cent were in villages, thus making banking services elusive even for the villagers with accounts.
To overcome this constraint, RBI had issued guidelines to enroll business correspondents, under which a variety of private businesses from petrol pumps to local kirana shops, could start acting as micro ATMs.
A bank account holder could approach a kirana shop to draw a small sum, say Rs 300, and the money would be dispensed from the shop’s cash box after authenticating the identity of the individual online.
The application would also deduct the money from the individual and credit it to the kirana’s account, Nilekani said. In Jharkhand, three banks were conducting a pilot project across several districts to disburse NREGA funds through micro ATMs, he informed.
If the idea worked the government could disburse up to Rs 100,000 crores it spends on developmental programmes such as NREGA through Aadhar-enabled Micro ATMs, he informed.