Finance Minister Nirmala Sitharaman had said that Aadhaar has brought down the cost of KYC to ₹3 from as high as ₹700. At the same time, the cost of loan processing has been lowered by almost 75 per cent.
Delivering a keynote address during a seminar on ‘India’s Digital Public Infrastructure - Stacking Up the Benefits’, organised by IMF in Washington DC on Friday (Saturday according to Indian Standard Time), she highlighted the benefits of DPI (Digital Public Infrastructure), India’s stack and how the Modi Govt has leveraged the benefits of it to serve the citizens, especially during the pandemic. “In India, we have seen how Digital Public Infrastructure (DPI) can contribute to targeted, quick, efficient & inclusive service delivery through innovative methods developed by both public & private sector initiatives,” she said.
Using the unique identity number ‘Aadhaar’ in Know Your Customer (KYC), she said that has brought down verification costs. As on date, “cost for customer acquisition has come down from ₹500–700 ($6-9) per person to ₹3 (0.4 cent),” she said. KYC is a regulatory and legal requirement. It enables banks and other financial institutions to know/understand their customers and their financial dealings to serve them better and prudently manage the risks of Money Laundering and Financing of Terrorism.
Aadhaar-based KYC also helped more and more people under financial inclusion by opening up many low-cost accounts, which also help provide every penny of government allocation directly to beneficiaries. India has opened 46.25 crore low-cost bank accounts under PM Jan Dhan Yojana, with 56 per cent of account holders being women. This has enabled the government to transform service delivery by building the world’s largest direct benefits transfer system.
“Our DPI based direct benefits transfer system has aided about 650 million people who received $322 bn directly into their accounts, which have led to overall savings of more than $27 bn just across key central government schemes. The greatest potential of DPI in reaching the last mile became evident during the pandemic. About $ 4.5 billion was transferred during the Covid pandemic directly into the bank accounts of 160 million beneficiaries.” she said. The greatest potential of DPI in reaching the last mile became evident during the pandemic. About $4.5 billion was transferred during the COVID pandemic directly into the bank accounts of 160 million beneficiaries.
Further, she said that due to the consent-based data exchange framework, the cost of loan processing is estimated to have declined by almost 75 per cent. The Finance Minister mentioned how UPI has been a game changer when making digital payments in India. Data shows digital payment transactions rose to 9,192 crore (at the end of December 31, 2022) from 8840 crore (at the end of March 22) and from 2,071 crore (at the end of March 31, 2018)
During the last five years, various easy and convenient modes of digital payments, including Bharat Interface for Money-Unified Payments Interface (BHIM-UPI), Immediate Payment Service (IMPS), and National Electronic Toll Collection (NETC), have registered substantial growth and have transformed digital payment ecosystem by increasing person-to-person (P2P) as well as person-to-merchant (P2M) payments. BHIM UPI has emerged as the preferred payment mode of the citizens and has recorded 803.6 crore digital payment transactions with a value of ₹12.98 lakh crore in January 2023, data from NPCI showed.