Banks and the Unique Identification Authority of India (UIDAI), responsible for the implementation of the Aadhaar-enabled direct benefits transfer (DBT) scheme, will separately take insurance covers against incidents of frauds and errors like identity mismatch.
The UIDAI along with the finance ministry has identified two situations that will necessitate an insurance cover for the implementing agencies: Liabilities in cases of ‘false-accept’ where the biometrics of person get matched against the Aadhaar number of the other (in case of UIDAI); when the Aadhaar number is not linked to the correct bank account that leads to a wrong person getting the benefit (here banks need cover).
According to a UIDAI official, the authority will assume liability only when the Aadhaar number and biometrics don’t match and the money is withdrawn using the banking correspondent channel.
Though currently the UIDAI is looking at only the banks taking insurance cover for financial losses, in the future other agencies involved in the process may also have to take cover. ?Not only the public-sector insurance companies but the private firms will also be approached,? the official said.
He, however, added that since the probability of false accept is remote, the premium that UIDAI might have to shell out won’t be big.
The DBT, described by government managers as a game changer and intended to reduce the wasteful spending by targetted delivery of subsidies and other doles, is still in early stage of the rollout. So far, only 50 lakh people have benefitted from the scheme, which is being panned out in phases.
Officials insist that no fraud of any kind has taken place till now, but research says that one in 50,000 transactions could go wrong in some way or the other.
An unchecked operational process can increase the false acceptance rate to over 10%.Many banks, including SBI, had apprehensions over using the UIDAI platform instead of theirs without proper safeguards against frauds and errors including false identification, the sources said.While UIDAI was pitching for an inter-operable system based on the platform provided by it that can be used by all agencies, banks wanted the cash transfers to be done through their own system.
However, the UIDAI turned down the contention of the banks saying such an exercise will lead to duplication of data. The UIDAI is now providing subsidies to banks for purchasing Aadhaar-compliant handheld machines. The UIDAI and the finance ministry were discussing possible solutions including an option for all the agencies involved to take a separate insurance cover and another option of providing a separate budgetary allocation to UIDAI so that it can provide for all liabilities arising from such frauds and identity mismatch.
Since banks were insisting that UIDAI should assume the entire liability in case of frauds and mistakes, the matter was referred to the law ministry. The finance ministry and UIDAI arrived at a consensus that the liability will be that of the agency at whose end the error happened, and therefore each agency involved in the implementation process should take separate covers.
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