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(GIST OF YOJANA) Digital Identity

[April-2022]

Digital Identity

In 2009, the Aadhaar project was launched by the Government. It was in technology infrastructure and reach more than 1.3 billion people living in India’s sprawling, varied, and sometimes inaccessible territory, to enroll for assigning a unique number, the ‘Aadhaar’, after de-duplication.

In 2014, it was combined with Jan-Dhan initiative, a financial inclusion programme for India’s large number of unbanked households then. These new accounts had the provision to be linked to both mobile numbers and The Impact of Aadhaar on Direct Benefit Transfer (DBT) scheme alone has led to the Integration of 439 government schemes and savings of USD 20.24 billion.

Aadhaar, creating the Jan Dhan-Aadhaar-Mobile, or JAM trinity. Today, more than 80% of all Indians have a bank account, up from half that level when the programme started. The Aadhaar Payment Bridge (APB), the soft infrastructure developed by the National Payments Corporation of India (NPCI), is now the catalyst for most of India’s social security and cash transfer programmes.

Today, the Central Government uses APB-enabled direct benefit transfers for 314 programmes/schemes. Another 450 programmes of the different State Governments also use these digital rails.

Aadhaar number to authenticate and establish their identity multiple times. Aadhaar eliminates the hassle of repeatedly providing supporting identity documents each time a resident wishes to access services, benefits, and subsidies.

Efficacy in Expanding Financial Services:

Aadhaar has emerged as a preferred identity document because of its features.

Aadhaar is ‘Know “Know Your Customer (KYC)’- compliant- The RBI states that if the Officially Valid Document (OVD) submitted for opening a bank account has the requisite personal details and address, there is no need to submit any other documentary proof. Aadhaar has both the details, so it’s a valid single document for proof (for small accounts).
Electronic KYC (e-KYQ: Aadhaar platform provides e-KYC service. With the consent of the resident, their demographic details along with photographs are shared digitally with a service provider. This has made the customer acquisition process far simpler and cheaper.
Aadhaar is a single source of Authentication: The ease of authentication via Aadhaar has interested financial institutions such as banks, insurance companies, stock brokerage companies, and government-related securities providers among others to consider the number to onboard new customers and to help Indians embrace digital services. Once residents enroll, they can use the Aadhaar number to authenticate and establish their identity multiple times. Aadhaar eliminates the hassle of repeatedly providing supporting identity documents each time a resident wishes to access services, benefits, and subsidies.
Micro-ATM with Aadhaar system is a well-stabilised system and many more applications can be built on this system. UIDAI is also exploring the opportunities on how we can leverage assisted mode for other new services related to insurance and investments by the residents.
Aadhaar Enabled Payment System (AEPS) has also brought banking services like cash
withdrawal, balance checking, etc., to the doorstep of the residents. This proved as a boon to the rural population, especially during the recent pandemic.

Way forward:

With ‘Fintech’ becoming the face of the financial world, an identification system that can go hand in hand with the evolving financial landscape is not just helpful, but essential.
This is just the beginning of the digital revolution, with a lot more to expect in 2022 and thereafter.
Face Authentication and liveness detection features, the backbone of video KYC, are now being considered by the majority of the Fintech BFSI industries as the simplest tools for customer identification. UIDAI is also taking significant steps to introduce the fourth modality of identification face. Currently, UIDAI validates citizens based on OTP, fingerprint, and iris.
In 2022, it is a given that the majority of the Fintech BFSI industries shall opt for these digital “identity services that shall enable them to offer services at an affordable price and instantly as well. UIDAI is also working on various new technological fronts and adapting the changes and moving abreast with the industry’ partners to have a new and fast-paced economy in the country.