[Reader-list] Banks ready to help in unique ID project- 185

[Taha Mehmood]

Dear All,

MV Nair, chairman of Indian Banks Association, will help Nandu, in
distributing the UIN numbers- this is the view which presented by  ET
story below.

However, it must be borne in mind that, that much of what we see in
IBA helping Nandu, has come up after a long process of thinking.

Please have a look at the introductory note on MNIC and banking, which
was prepared for a workshop held between members of IBA and The
Institute for Development and Research in Banking Technology.

This workshop was called 'OPEN STANDARDS FOR  FINANCIAL INCLUSION. The
workshop was held at 'Centrum', 1st Floor, Centre 1,World Trade Centre
Complex, Cuffe Parade, Mumbai between, 5-6 February 2009.

Just to give you a sense of what is IDRBT, please have look at the
literature provided by them- 'The major technology initiatives of the
Institute include the nationwide communication backbone for the
Banking Industry – the INdian FInancial NETwork (INFINET);
establishing the Certifying Authority (CA) and issuing digital
certificates for the Banking and Financial Sector; developing and
implementing the secure, Structured Financial Messaging System (SFMS)
for free flow of financial messages across the industry and connecting
most of the ATMs in the country through the National Financial Switch
(NFS).'

The work shop had a special focus on MNIC and financial inclusion. As
the note suggests- 'Most card-based solutions provide or extend the
functionality of the ATM transaction set (operated manually by means
of the Business Correspondent). The basic magnetic stripe card carries
information in its Track 2 that is used for financial
transactions.Smart-card based solutions extend this and offer a wide
range of choices in terms of interfaces (contact/contactless), memory
capacities,operating systems and protocols for communication between
the card and the terminal. As of now, there is no standard relating to
data
format specifying the account details that the card has to carry nor a
standard card of a specified size. The terminal capability (and the
printer type whether thermal or impact printer) also needs to be addressed.'

The following measures were suggested-

'How to achieve all above (from the experience of Driving License,
MNIC, ePassport etc.)

Smart Card Technology Standardization: The Technology specifications
of Smart Card must be standardized and should
be based upon the open source. In case of all above projects,
Government has notified SCOSTA standards to be used.
Following projects and respective ministries have mandated SCOSTA as
smart card standard.
Driving License and Vehicle RC Card , Ministry of Shipping, Road
Transport and Highways.
Multipurpose National ID Card (MNIC) Min. of Home Affairs.
ePassport, Ministry of External Affairs
Rashtriya Swasthya Bima Yojna (RSBY), Min. of Labour.
National Rural Employment Guarantee Scheme (NREGS), Ministry of Rural
Development/ Department of Post.
Public Distribution System (PDS), Ministry of food and Civil Supplies.

Again the issue of interpoerability came up and was addressed as thus-

Interoperability – the technological design of the system and its
functionality. The key issue is whether or not the mobile scheme is
essentially a proprietary system embedded in the network, equipment
and operations of an existing mobile operator or instead stands
free of any particular network. Is the service tied to one mobile
network operator or is it network-independent? Thus, in the Indian
context, there is need for the service providers to ensure
interoperability for GSM and CDMA customers to have mobile
transactions.

Please read the story below for more.

Warm regards

Taha



http://economictimes.indiatimes.com/News/News-By-Industry/Banking-Finance-/Banks-ready-to-help-in-unique-ID-project/articleshow/4861514.cms

Banks ready to help in unique ID project
6 Aug 2009, 0130 hrs IST, ET Bureau

MUMBAI: Banks are likely to play a vital role in government's
initiative to issue unique identification number for every Indian
citizen.
Speaking to ET, chairman of Indian Banks Association, MV Nair said
"IBA will like to work very closely with the government to make this
venture successful because eventually banks will be the biggest
beneficiaries." Recently, government appointed Nandan Nilekani, former
CEO of Infosys, as chairman of Unique Identification Authority of
India which will issue UIN.

IBA led by Mr Nair is slated to meet Mr Nilekani and other government
officials later this week to discuss on how IBA and Unique
Identification Authority of India could work closely on this matter.
Mr Nair said that the UIN will drastically reduce the paperwork that
banks require to do for opening a new account.

This is because since 2004 banks are required to verify the identity
of the customer which requires them to undertake a vigorous exercise -
know your customer (KYC). The KYC exercise involves a lot of paper
work to support customers identify.

As things stand now, banks have covered over 90% of their customers
under the KYC norm. "It would be easier for Unique Identification
Authority of India to issue UIN cards to bank account holders since
they have already have complied with the KYC norms. This will give
them a better start since banks have already collected the data to
establish the identify of the account holder," said a general manager
in charge of IT in a public sector banks on conditions of anonymity.

RBI data shows that banks have nearly 37 crore savings accounts. Even
if a large number of these accounts were duplicate (because the a
person can have multiple accounts), a huge portion of the account
holders would be better positioned for UIN card, if the Unique
Identification Authority of India gives them first preference.

"It would seem an obvious move to use the UIN card as a payment
product. World over governments are using payments products to make
payouts such as annuities directly to citizens," said Amrish Rau,
vice-president and country manager First Data Corporation — a company
that processes financial transactions including those by credit cards.

"The way I see it the card could emerge as a payment card linked to a
savings account, or it could simply function as a pre-paid instrument
where the government credits the account directly. This could be used
for various payments including the National Rural Employment Guarantee
Scheme (NREGS)" he added.

Mr Nair, who is also the chairman and managing director of Union Bank
of India is of the view that UIN will help banks in achieving
financial inclusion and complying in KYC norms. "It will also help in
tracking customers credit record and also bring down cost of financial
transaction," he said.

He further said that it needs to be studied if the "UIN could double
up for financial transaction." By this meant whether the UIN card
could be operated as a smart card which in turn will reduce the burden
of issuing debit cards for the entire banking industry.