Nilekani woos financial service providers to log on to UID

The Unique Identity Authority of India (UIDAI) chairman Nandan Nilekani on Monday urged financial services providers like pension, insurance, mutual fund and banking firms to consider riding on the UIDAI platform to expand the reach of their products across the country and meet the government?s financial inclusion goals. Nilekani stressed that taking a product like the New Pension Scheme (NPS) to millions of citizens required a reduction in its transaction costs and an ubiquitous micro-payment infrastructure.

Speaking at a pensions conference, Nilekani said that though the UID would be a voluntary number, it can be made mandatory for specific applications by relevant regulators.

The first such agency that has accepted making UIDs mandatory is the rural development ministry, which has decided that all National Rural Employment Guarantee Scheme beneficiaries must have UIDs. ?This alone will bring 200 million into the UIDAI database,? Nilekani said.

The UIDAI chief envisages that points of presence like banks can act as enrollment and authentication points for UIDs. ?In a product like pensions, establishing one?s identity for life is a key requirement. So online authentication with a mobile phone and a fingerprint reader would be a game- changing feature,? he said.

UID can also help trace financial transactions as it would conform with the Know Your Client norms set by financial regulators. Most importantly, Nilekani said that UIDs can help ensure that government transfers such as co-contribution to a pension scheme reach the beneficiaries.

?Benefits under the National Old Age Pension Scheme (NOAPS) are paid in Karnataka via money orders from post offices to the ostensible beneficiary. We don?t know how many real people are getting it, how many are duplicates, whether payments made on time,? the UIDAI chief said.

?In Madhya Pradesh, they put it into your bank account. We have 75,000 bank branches of which 6% are in villages. So you have to walk 20 kms once in two weeks. The third model ? the money goes to the panchayat and we have seen how efficiently that works,? he pointed out.

?So in all our current models ? the last mile is flawed. Our view is that you can address the last mile if you can have a million-plus banking correspondents with a UID-enabled cellphone and fingerprint reader,? Nilekani said.

?The key challenge is how to change the last mile of payments in India. The UID provides a low-cost, high-volume method, very convenient to users, to handle all kinds of payments, withdrawals or deposits,? Nilekani said, urging the pension industry and other financial services players to join hands with UIDAI.