The dream of Nachiket Mor and his committee to provide bank account to every adult Indian in two years, may remain just that — a dream, if the past data is anything to go by.
The recommendations of the Mor committee — to provide a bank account to every Indian over 18 years by January 1, 2016 — is based on banks opening account for all individuals using know-your-customer authentication done by the Unique Identification Authority of India (UIDAI) for providing the 12-digit Aadhaar number to resident Indians.
Till date, the UIDAI has provided Aadhaar number to about 56 crore Indians. It further plans to provide Aadhaar number to 3 crore Indians every month and envisages to complete the coverage by December 2015.
But UIDAI has by design or default left out most people working as migrant labourers and domestic helps as people of these categories do not possess a valid identification and address proof.
So, before banks can ride on UIDAI enabled KYC verification, UIDAI will have to re-double its efforts and seek such people out and issue them an Aadhaar number.
According to the Mor Committee report, only 36 per cent adult Indians — 45 per cent in urban centres and 32 per cent in rural areas — have a bank account.
It is, however, not clear how many of these accounts are unique because banks still lack the unique customer identification code, where dual accounts of the same person across banks can be identified.
Low branch density
Since a majority of adult Indians still live in rural centres, despite the recent demographic shift, banks will have to severely intensify their efforts to open accounts for all adults living in rural centres. This is likely to be a daunting task given the low branch density in rural areas.
Though banks have added over 10,000 branches in rural areas in the three-year period between 2010 to 2013, a lot needs to be done to get more foots on the ground.
If banks have to provide bank accounts to another 50 crore Indians in 23 months (assuming that Aadhaar roll-out is smooth and error-free), it will mean over 2 crore accounts each month. Before that RBI will have to discuss, debate and then notify the Mor committee recommendations. Time is running out.