Next Aadhaar in financial inclusion: Saral prepaid card

Five of India’s biggest banks collaborate with Visa and Aadhar to provide accessible and affordable one step banking in Delhi

shivangi-narayan

Shivangi Narayan | December 12, 2012



Delhi government on Wednesday launched the ‘Saral Money Prepaid card’ to provide banking services to those people who are unable to open a bank account due to lack of supporting documents for their ‘know your customer’ (KYC) verification. Saral has been launched by five of India’s prominent banks namely Axis Bank, HDFC Bank, ICICI Bank, Indian Overseas Bank and State Bank of India in collaboration with the payment gateway provider, Visa and Aadhar.

To open a bank account with the above five banks and to get a Saral Money Prepaid card, a person will now just have to produce the Aadhar card to fulfil the KYC norms. The limit of such accounts will be Rs 50,000 and the customer will be able to do cashless transactions with the help of the Saral card at the many authorised places in the city.

Chief minister of Delhi Sheila Dikshit said on the occasion, “It is very important to do away with old archaic systems (for banking) and leap forward in the future. The picture of banking is going to change very soon in India.”

“Saral will provide banking to people who could never have dreamt of owning a bank account,” she added.

All you have to need, to open a bank account for Saral is your Aadhar card. You can walk up to an authorised banking correspondent, which by the way can also be your local grocery shop vendor, fill a form with your name and other details, give a photocopy of your Aadhar card (which will also work as photo authentication) and authenticate yourself on the biometric reader through any of your ten fingers.

Once you are authenticated through Biometric and Aadhar number, you will be verified as a genuine customer and your account will be opened in a day. Such verification through biometric and Aadhar also called ‘e KYC.’

Nandan Nilekani, chairmain, UIDAI, said that the UID/Aadhar platform is an open sourced identity service platform which can be used by anyone who wants to embed identity verification within their product.

“This is what VISA did (to provide Saral card to the customers),” he said.

Nilekani said that providing easy banking services is only the first step in the larger vision of financial inclusion of Aadhar. The next step would be to provide financial services to the people such as insurance, loan and other such products to increase their participation in banking in India.

With a Saral prepaid card which you get with your instant bank account, you will be able to recharge your mobile phone, pay your bills, book railway tickets and withdraw cash from an ATM. You can even deposit and withdraw cash from any of the authorised banking correspondents or banking correspondent centres such as again, your local grocery shop. The payment gateways for each of these transactions would be provided by VISA. The limit of such transactions will be 50, 000.

Saral is an example of a public private partnership in the banking and financial services area. This sector has received a tremendous boost after the government announced the direct cash transfer scheme for providing subsidies for the poor. If there is one scheme which has made the benefactors happier than the beneficiaries, it is the direct cash transfer scheme (DCT).

With the launch of the DCT, the section of the population which stayed away from the purview of any kind of banking in India has been now looked at with interest. Hence, the slum dwellers, the migrant labourers, the people in remote areas, the women in these sections and other socially and economically vulnerable sections are the new “market” for the banks to enter into. Financial inclusion is finally fashionable as it finally will give the market what the market wants – a good and robust Return on Investment.

The vision is in the right place though. With every Indian powered with a bank account, the flow of money from the unorganised sector can now finally flow into the organised banking sector of India giving both the banks and the customers, high returns. People will now be able to manage their money better and the system will finally move to a lot more transparency than what it is used to right now.

There are teething troubles though; the biometric reader only reads data from the ten fingers. Although the iris verification is present for making the Aadhar cards, it is not present with the banking correspondent. This method excludes those with disabilities in their hands or those with amputated hands.
The problem of biometric reader not being able to read the finger prints of the manual labourers is also well known.

Also, in accordance with the RBI guidelines for KYC and for address verification, a bank will not be able to open the Saral account and provide the pre paid card if the current address of the person is different from that in the Aadhar card. In such an instant, he or she will have to produce a document for address verification which was the problem to begin with.

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