Move to make Aadhar basis for all KYC needs

The Reserve Bank of India (RBI) is likely to soon notify that the information about an individual captured in 'Aaadhar', issued by the Unique Identification Authority of India (UIDAI), would be sufficient to fulfill the KYC (know your customer) norms for all financial products.

Under the current RBI norms, Aaadhar is acceptable for KYC only for no-frills bank accounts.

A senior UIDAI official told Business Standard that amendments to the Prevention of Money Laundering Act (PMLA) had now made Aadhar sufficient KYC for all financial products.

"We have taken up the matter with RBI. If Aadhar is good under PMLA for KYC, then it should be good across the board and we have asked for a suitable step by RBI in this regard," said the official.

These and other steps to give a momentum to the process of making Aadhar an important driver of the government's financial inclusion agenda were discussed at a meeting here on Tuesday.

It was convened by the department of financial services (DFS) and attended by UIDAI chairman Nandan Nilekani, secretary DFS Shashikant Sharma and chiefs of public sector banks.

RBI's notification would enhance Aadhar's acceptability and is also expected to expedite its progress. Aadhar can also facilitate account at banks for no extra cost; the KYC cost also gets reduced.

UIDAI has issued 5.1 million Aadhars till now. Of these, 84 per cents have consented for opening of new bank accounts. The First enrolment for Aadhar had been done in September 2010.

The official said Aadhar's vision was to be an enabler that permits access to goods and services and turn it into a flexible national infrastructure, being an identification valid through the country.

Other significant advantages in case of financial products include, linkages to a bank account and cellphone, an inter-operable platform for multiple applications and identity verifiability through mobile and online.

UIDAI had recently signed agreements with all 26 public sector banks to make them its registrars for issuance of Aadhars.

Currently, only State Bank of India has started enrolment across 14 states; other banks are set to join. The authority is also working with National Payments Corporation of India to start an Aadhar Enabled Payment System.