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a small update on jan dhan yojana

a quick and dirty story on jan dhan yojana.

The aggregate numbers are designed to impress — 6.99 crore accounts have already been opened since PM Narendra Modi launched Jan Dhan Yojana on Independence Day, according to pmjdy.gov.in, a government website. But several concerns lie hidden beneath those numbers.

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day one of jan dhan yojana

i reported for this story on the first day of jan dhan yojana. while the media exults over its success in opening over a crore accounts on day one, cracks in the model are already visible. cynical tokenism, all this.

the new, new contours of financial inclusion

from the et special issue on modi sarkar completing 100 resplendent days in power, this story on financial inclusion…

Every two years, India’s financial inclusion drive reformats itself into a brand new, entirely unrecognisable avatar. Till about three years ago, it starred banks, the Reserve Bank of India and banking correspondent companies. Then came DBTs and the finance ministry, with its common banking correspondent (BC) auctions. Also came Aadhaar, opening bank accounts and keen to become sole authenticator for all financial transactions. In 2014, the landscape has changed again, partly due to Narendra Modi’s Jan Dhan Yojana.

a big setback for aadhaar

The finance ministry has decided to limit Aadhaar’s role in its welfare scheme payments and, instead, use ATM-enabled RuPay cards for last-mile authentication to withdraw money. While it will continue to use Aadhaar for opening accounts and to eliminate ghosts and duplicates from beneficiary rolls, the ministry has decided to give RuPay ATM cards with bank accounts being opened under to-be-announced financial inclusion drive, Sampoorn Vittiyea Samaveshan, government officials told ET. “We do not want that an account holder should be restricted on a particular technology platform. By providing RuPay powered ATM card the account holder can transact on multiple platforms,” a senior finance ministry official said on the condition of anonymity. This is a large blow to the Unique Identification Authority of India (UIDAI) which has, till now, regarded authentication services as one of its principal functions.
ps: for context on the quote, see this post (and the accompanying article).

RBI opposes NDA financial inclusion plan

The new financial inclusion push, Sampoorn Vittiyea Samaveshan, which Prime Minister Narendra Modi is widely expected to unveil on August 15 does not quite have the central bank on its side. Top government sources told ET that the Reserve Bank of India (RBI) was in disagreement with three critical elements of the drive.

it opposed the Rs 5,000 overdraft, the credit guarentee fund, and the aggressive timelines. on all three counts, it was over-ruled. a quick story with my colleague dheeraj tiwari, this one.

the latest question on aadhaar

…While researching this story, ET reviewed two drafts produced by the Department of Financial Services – one in June, and the second in July. The draft dated 8 July, 2014, says: “This account would be linked with the Aadhaar number of the account holder and would become the single point for receipt of Direct Benefit Transfers (DBT) from Government/Local Bodies.”

According to a source close to the UIDAI, who spoke to ET on the condition of anonymity, this phrasing suggests that while Aadhaar numbers might be seeded into bank accounts, it might not be used for authentication. In other words, once the cash flows into the Aadhaar-linked bank account, last-mile authentication when the money is being withdrawn will be done using the authentication systems of either the relevant bank or the last-mile service provider – like a Banking Correspondent (BC) company.

Not using Aadhaar for last mile authentication has significant fallouts for the UIDAI. Which, among other things, has the Aadhaar-enabled Payment System as one of its key components, and sees authentication services as one of its principal functions and revenue streams.

a small update on the ongoing churn over aadhaar and dbt. a purely online story, this.

nilekani meets modi, saves aadhaar

There is enough evidence to suggest that the crucial July 1 meeting between Nilekani, the prime minister and the FM, brought forth a volte face in the government stand on UIDAI. Only two days before this, on July 3, Home Minister Rajnath Singh, Telecom, IT and Law Minister Ravi Shankar Prasad and Planning Minister Rao Inderjeet Singh had met with top officials to discuss UIDAI versus the National Population Register (NPR), an entity under the home ministry that conducts the decadal census. The conclusions did not favour UIDAI in the form it was running till then.

a story by my colleague vikas dhoot and me which goes some way in explaining a surprising about-turn by the government re the aadhaar project.