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India Uses Its Biometric Database to Enable Banking Access for The Country’s 1.2 Billion Population

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(Credit: Umesh Goswami/The India Today Group/Getty Images) INDIA - DECEMBER 06: THE CUSTOMER WIDRAWING MONEY AT KOTAK MAHINDRA BANK ATM CENTRE IN UMMBAI.
THE CUSTOMER WIDRAWING MONEY AT KOTAK MAHINDRA BANK ATM CENTRE IN UMMBAI.
April 11
6:43 AM 2016

India is determined to give its people easier access to banking and financial services. Under the new system, India's population of 1.2 billion, many of whom fell below the poverty line or uneducated, will be able to send digital payments using the country's biometrics system.

The project is a collaboration between India's retail banks, backed by the country's central bank, Reserve Bank of India (RBI). The project, called the Unified Payment Interface, is designed to make it easier to transfer and receiving money, as reported by Bloomberg. The transaction will be as easy as exchanging email of text messages.

The digital banking effort will be integrated with India's existing national ID system. The database, called the Aadhar database, was launched by the Unique Identification Authority of India (UIDAI). The system is aiming to collect biometric information such as fingerprints and iris patterns from every person in India. After their biometrics data are collected, the system will generate a unique 12-digit number associated with the data as the person's national ID. The Aadhar is recognized as the world's largest national civil ID program and biometric database.

With the existing biometric database, the banks are confident that they can succeed with the effort. Until the end of March, 999 million people of India already signed up for a number in the Aadhar database. That's about 80 percent of the total population. According to TechinAsia, the government already assured Indian citizens that signing up for Aadhar will not be mandatory. However, the government offers many benefits that could be enjoyed by people who signed up, such as scholarships and subsidies on utilities.

Biometric Update reported that India's DCB bank is the first to introduce banking facilities integrated with the Aadhar biometric information database. The bank has launched Aadhar-based ATM where people can make transactions using their Aadhar ID number instead of a PIN. Transactions can also be initiated by swiping user's identity card at the ATM, and then confirm user's identity with the fingerprint scanner.

According to India's central bank data, there are only about 23 million credit cards active in the country, despite the population of more than a billion. Other data from PricewaterhouseCoopers revealed that more than 233 million Indians have never been to a bank. Moreover, most bank accounts registered in the country have a balance of zero.

With the new banking initiative backed by the central bank, India is pushing forward to give more people financial services. The program will use the country's national biometrics ID system, the Aadhar database, to enable people make banking transactions with just their ID number or ID card. 

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