Thursday, September 25, 2014

Proclaimed Financial Inclusion affected by unwanted complexity

In recent times, the government of India putting great efforts to bring financial inclusion to everyone. This has to happen through banks and other financial institutions.  The key to this is the usage of unique id to operate bank accounts as well as other services. For this to happen the service provider institutions has to enroll as AUA(Authentication User Agency) and KUA(KYC User Agency) with the UIDAI (Unique Identification Authority of India). This enrollment is mandatory because this enables UIDAI to make sure that only relevant organization can provide E-KYC and Aadhaar based authentication and prevent the miss use of the system.
The issue is that the enrollment process is too complicated to complete in minimum time. It is taking months to get even the first level of application to go through. Later even after submitting a lot of document proof for the capabilities (both financial and technical) this has to be presented before UIDAI in person. No matter how big your financial institution is, it takes too much time to get things rolling. Even for a firm which serves 50 million customers with 4000 plus branches, it takes too much time to just get the initial go ahead.

In this digital age, all these bureaucratic delays can be avoided if the e-governance infrastructure is effectively used. The central government, as well as UIDAI, should look into this matter seriously. They should take steps to remove redundant steps that are just causing delay than adding any value to the enrollment process. Otherwise, the Govt. is going find it very hard to build up the Aadhaar UI ecosystems which are essential for its aggressive financial inclusion goals.