HDFC Bank is set to expand its micro ATM operations further, boosting new customer enrolments online through Aadhaar cards. Starting October 2014, India’s second-largest private sector bank has been using micro-ATMs to authenticate the personal information of prospective customers in remote areas.

This is done in less than a minute, requiring just the customer’s Adhaar number and finger impression, thereby doing away with physical documentation to conform to the Know Your Customer (KYC) guidelines.

The bank is doing an e-KYC pilot at 16 ultra small (with one or two employees) branches, where it will be placing these machines permanently, said Vikas Pandey, Head, Strategic Projects, HDFC Bank.

The number of such branches is likely to increase to 300 in the next three-four months. HDFC Bank has nearly 1,600 micro-ATMs on the ground and also aims to double this count to over 3,000 during the period.

Micro-ATMs, which are handheld devices carried by bank officials and business correspondents, are used for transactions such as cash deposit/withdrawal, balance enquiry and funds transfer. The bank claims to have accomplished e-KYC for about 11 lakh customers, and carried out around 90,000 overall transactions per month, including deposits, and withdrawals, through micro-ATMs.

The private bank is also undertaking a pilot project in Punjab, wherein 30 Grameen Banking Officers (GBOs) take these machines to nearby villages at pre-defined times and frequencies every week.

“They (GBOs and customers) can meet at a common place or a Gurudwara, thereby improving banking accessibility. This will expand our geographic reach and meet the government’s programmes, such as DBT (direct benefit transfer) and pension schemes, through biometric identification facilities on these machines,” Pandey said.

Usually, to open a bank account, a customer needs to submit address and identity proofs together with a recent photograph according to RBI-mandated KYC guidelines.

Pointing out that many customers in remote areas do not have address or identity proofs, Pandey said e-KYC can be used instead. These devices are connected to the banks’ core banking solution platform via mobile SIM/internet data cards.

Major challenges Despite the two major challenges — weak network connectivity (largely in rural areas) and failed finger print detections (farmers and labourers tend to have thickened skins on their palms) — HDFC Bank says it is evolving with the experience.

“A telecom operator has to be present there, without which the machine cannot work. So, we are in touch with the Department of Financial Services and it has been raised with the TRAI (Telecom Regulatory Authority of India) that we want more towers to come up,” Pandey said.

Urban usage Further, though micro-ATMs are largely for rural markets, the bank will also try to use them in urban areas, wherever the branch lobby gets crowded, to ease the pressure at the counters.

HDFC Bank will also bring in green-pin solutions (providing pin on mobile phones) and look at enrolment in Central insurance and pension scheme, bill payments, among others, through this route.

“In Chennai, our bank is already disbursing pensions through these machines,” Pandey added.

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