India’s journey towards digital Financial Inclusion RS Sharma Chairman, Telecom Regulatory Authority of India (TRAI)

Issues Covered Financial Inclusion Challenges Digital ID Infrastructure How does it solve FI Problem Some of the programs and their scale Roadmap of Financial Services

FI Challenges Lack of documents for KYC Lack of banking infrastructure Cost of financial transactions India – low value and large volumes Technology driven ubiquitous banking is the only solution

India’s Digital ID Infrastructure

Digital ID Infrastructure : The Context Provision of a robust, reusable ID to those who do not have any formal ID document To clean up existing databases from ghosts and duplicates Improve Targeting and Service Delivery Reduce cost of Delivery of Services

1234 5678 9012 Unique Lifetime Name DoB/Age Gender Address Mobile/Email 1234 5678 9012 Unique Lifetime What is Aadhaar

Features of Aadhaar Only Numbers – No Smart Cards Random Numbers – No Intelligence, No Profiling Voluntary in nature All Residents – Including Children Uniqueness – Ensured through biometric attributes No Guarantees to Citizenship, Rights, Entitlements Ensuring Security and Privacy of Information Ubiquitous Authentication – From No ID to Online ID

More than 1 Billion in 5 Years Source: Data from http://www.uidai.gov.in

Service Delivery Potential of Aadhaar Uniqueness and Existence ensures no fakes or duplicates KYC for multiple services : Bank accounts, Financial inclusions, Mobile Connections, Social Assistance Programs Entitlements should reach the intended beneficiary – non-transferability can be ensured by authentication at the point of service delivery Many domains will be able to use as a proof of presence for the beneficiary Identity platform for various domains Aadhaar online authentication provides a common platform which can be used across all applications.

Aadhaar-based Technology Enablers for Financial Inclusion Open Bank Accounts using Aadhaar Linking of Aadhaar to existing bank accounts Aadhaar Payment Bridge (APB) Simplifies disbursal of funds – uses only one account for all disbursals Aadhaar Enabled Payments System (AEPS) Inter-operable, portable anytime anywhere Transactions (AEPS)

A direct pipe to the Resident

Access, Cost and inter-operability are the key factors to take Jan-Dhan forward Onboarding Cost Break Even Investment Target Market Size Rs 1500 Rs 300,000 3M Households Rs 100 Rs 20,000 34M Households Rs 10 Rs 2,000 105M Households Source: NCAER-CMCR survey, http://ww.openthemagazine.com, discussions with ScripBox

Opening Bank Account – Instant & Paperless Aadhaar e-KYC (Know Your Customer), approved by the regulator (RBI) allows instant access to digitally signed Aadhaar via online authentication. Bank account can be opened instantly in a presence-less (remotely) and paperless fashion! Ram KYC Service Agency 1. Instant A/c request 6. Instant Activation 4. e-KYC UIDAI e-KYC Service 5. KYC details: Name, Address, Date of Birth, Gender, Photo, Mobile, Email 3. Forward to KSA 2. Account activation request (Aadhaar + Biometric/OTP) Service Provider Field Agent Ram goes to withdraw cash Explain MicroATM TransferMoney txn, with fingerprint to merchant bank NPCI authenticates the resident using UID, gets bank account using the ID mapper Executes the debit and credit transaction Sends SMS to resident and BC about debit and credit respectively BC gives resident the cash. Any Bank, Any Mobile, Any BC – no hardwiring of components or vendors – thru UID higher level of abstraction MicroATM can perform all txns - Can perform deposits and C2C transfers as well.

Sending Money to Aadhaar Holder via Aadhaar Payments Bridge (APB) Governments, organizations, and individuals can transfer money to residents by specifying the Aadhaar number and amount. State Governments Any Accredited Bank Government of India APB @ NPCI + 270 million already mapped Any bank of customer choice Employers 140 million DBTs occurring every month in LPG subsidies. Portability of Bank Accounts! Family, Friends

Cash-in, Cash-out, Transfer ID mapper Resident - Ram UID 9999 8564 4663 8. Info- IVRS/ SMS 6. Debit 4. Authenticate and execute Ram’s bank a/c 5. Authenticate NPCI switch 1. Withdrawal request 9. Cash 7. Credit TransferMoney From UID 9999 8564 4663 To UID 9999 5968 3094 Amount 300 3.NPCI request 2. Money transfer instruction + biometrics BC’s bank a/c BC (Kirana, SHG, PO etc)) With Micro-ATM UID: 9999 5968 3094

Payments through Micro-ATMs

Frugal Digital Banking : Tech Enablers Digital ID Infrastructure – Aadhaar – Online and Authenticable e-KYC, e-Sign and Digital Locker APB and AEPS – perfected and working at scale Smart phones with authentication device provide Single Click two factor authentication systems Cost-effective, frugal banking with millions of devices will remove ‘financial untouchability’

India is enabling this revolution by multiple layers of technology COMMERCE (GSTn) CREDIT (RBI) INVESTMENTS (SEBI) SKILLS OTHERS Provides a modern privacy data sharing framework Open Personal Data Store, E-sign CONSENT LAYER Game changing electronic payment systems and transition to cashless economy IMPS, AEPS, APB, and UPI CASHLESS LAYER I N D I A S T A C K Rapidly growing base of paperless systems with billions of artifacts Aadhaar e-KYC, E-sign, Digital Locker PAPERLESS LAYER Unique digital biometric identity with open access of nearly a Billion users Aadhaar Authentication PRESENCE-LESS LAYER JAM Jan Dhan, Aadhaar, Mobile

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