Role of banks in implementing Aadhaar

Aadhaar Bill
Aadhaar Bill

Introduction of Aadhaar has seen a phenomenal response. Since its introduction in 2009, the UIDAI has grown to be considered as the worlds largest national identification number project, recognizing 100 crore people with 93% adult residents of India, as stated by a recent study.

Conducting the enrollment, proof reading, biometric identification like retina scanning and collection of finger-prints is carried out by the UIDAI or the Unique Identification Authority of India. Banks have played a monumental role in making this process a great success.

 Ease of setting up:

The information collated for Aadhaar is very useful for banks. Therefore, they aim at collecting necessary details from all individuals who come to enroll for Aadhaar cards. In this way details for both the Aadhaar number as well as KYC scheme can be collected conveniently, thereby reducing time and effort.

Opening a new bank account:

Aadhaar letter provided by the UIDAI is accepted by banks as a valid proof to open a new bank account. Additionally, it can serve as a proof of identity and address. Therefore, it eliminates the need to produce various documents that were required earlier.

Cash subsidies:

The prime aim of the Aadhaar is to facilitate the government in successfully implementing the cash subsidy scheme throughout the country and also works towards transferring the LPG subsidy into the bank accounts of the beneficiaries. Subsidies offered on commodities like kerosene, sugar, rice, pulses and many other products are also transferred to the linked account.


Students receiving scholarships from the government can get this money transferred to their bank account linked to their Aadhar number. However, this is mandatory only for students from select Indian states.


Accounts linked with Aadhaar are accessible across the country and in the near future, consumers will be able to access the same via ATMs as well, making the process effortless and user friendly.

In addition to this, government is also seeking to implement inclusion through mission mode approach under PMJDY to provide a universal and clear access to banking facilities, which includes – Rupay Debit card, micro payments, pension etc.

RuPayKisan Card:

RuPayKisan Card was launched in 2012 to assist farmers get  financial help in a simple way. The card has no entry fee, with an inbuilt accident insurance cover of Rs.1 Lac for farmers and would fulfill credit requirements of farmers by offering low interest rates and high repayment durations. The biggest benefit of this is that farmers dont personally have to visit the card-issuing bank for operating the account.

Micro payments:

The UIDAIs authentication process will allow banks to verify residents from rural areas, remotely. This will reduce dependence on cash, and lower costs of transactions. After establishment of various micropayment methods, a variety of other financial instruments such as micro-credit, micro-insurance, micro-pensions, and micro-mutual funds can be implemented on top of this payments system. The micropayments solution is just one of the many developmental applications of the Aadhaar.

All these services will create a social security net for the poor and those working in the unorganized sector. Thus, inclusive financing i.e. delivery of financial services at affordable costs to sections of disadvantaged and low-income segments of society can be made accessible and affordable by implementing Aadhaar over the next decade.

We hope this post has given you a clear understanding of the role of Banks in implementing Aadhaar and making it successful.

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