New Delhi: State-owned lenders Dena Bank and UCO Bank have signed a memorandum of understanding (MoU) with the Unique Identification Authority of India (UIDAI) to act as registrars for the 'Aadhaar' biometric smartcard project, reports PTI.
Both banks will act as registrars for providing Unique Identification Numbers under the UID initiative.
The banks will provide UID numbers to existing as well as future customers by collecting biometric and demographic details as per the norms established by the UIDAI, Dena Bank said in a statement.
This provision will enable real-time online authentication of identities for satisfying the know-your-customer (KYC) norms required for opening of 'no frills' savings accounts by sections of the population that do not have alternative proof of identity, it said.
Through this MOU, the banks will leverage the UID to deepen the reach and ease the process of financial inclusion, it said.
A first step on the road to financial inclusion, the UID project aims to develop the architecture of technical standards and an ecosystem to facilitate collection of demographic and biometric attributes, it said.
Many large corporations are looking at Aadhaar as a pool of prospective customers and are joining hands with UIDAI. Visa is the latest entrant on board the UID bandwagon
The business of providing an identification number to around 60 crore is becoming lucrative day-by-day. Visa, an electronic payments technology company, has said it has developed a unique payment solution, using the Unique Identification Authority of India (UIDAI) platform.
The solution is designed to provide a payment infrastructure for unique identification (UID) or Aadhaar holders, especially the un-banked and under-banked.
In a release, Visa said it would provide its infrastructure to process payment transactions using biometric authentication from Aadhaar. As part of the proposed solution, once an individual enrols into Aadhaar, the partner bank can issue a Visa payment card, linked to his/her Aadhaar biometric authentication.
Visa is enhancing its systems to handle biometric data along with payment data and integrate with Aadhaar for authentication purposes. Visa is working with Total System Services Inc (TSYS), a leading global technology company, as the biometric authentication technology partner, for the UIDAI project, it added.
It's nothing illegal for an institution like Visa to join the UID bandwagon. However, the question is why a for-profit organisation would want to join the controversial project and spend its own money to establish this new infrastructure? There are three aspects.
One, UIDAI has a huge budget and the authority is likely to spend more than Rs45,000 crore over five years. For FY11, its budget allocation is Rs1,900 crore and a major part of this amount would be used for reimbursement of enrolment costs to the registrars as well as residents.
Second, UIDAI cannot handle a project to tag 60 crore residents on its own. And third, if anybody wants to carry out targeted marketing aimed at a population of 60 crore at one go, then UID certainly would prove to be a bonanza. (See: http://www.moneylife.in/article/78/7819.html).
In the release, Visa said, "Keeping in mind the large un-banked and under-banked communities in many parts of the country, Visa along with its banking partners will soon launch a financial inclusion pilot, using the UIDAI platform, after identifying suitable locations."
Already, the UIDAI has opened a can of worms by agreeing to allow access to registrars, like state governments and banks, as well as insurers who will collect individual data for the authority through their know-your-customer (KYC) database. This means that any company may be able to access the huge database (of about 60 crore people expected by the end of 2015) simply by becoming a 'registrar' or 'partner' and using the data for their own marketing initiatives. (See: http://www.moneylife.in/article/78/9594.html).
The UIDAI had selected three consortia - Accenture, Mahindra Satyam-Morpho and L1 Identity Solutions - to implement the core biometric identification system for the Aadhaar programme. UIDAI has stated that the three agencies would design, supply, install, commission, maintain and support the multimodal automatic biometric identification subsystem. The three vendors would also be involved in development of the multimodal software development kit (SDK) for client enrolment stations, the verification server, manual adjudication and monitoring functions of the UID application.
The newly-established USE boasted of a world record for capturing the highest market share and daily turnover. Turnover has crashed now. With trading being literally free, will the USE survive?
The country's newest stock exchange, the United Stock Exchange (USE), was launched amid much fanfare a couple of months ago. With eyes firmly set on the skies, the USE went on a vigorous membership drive, even with established rivals like National Stock Exchange and Multi-Commodity Exchange - Stock Exchange (MCX-SX) patrolling the waters in this keenly-contested segment. It made headlines on its debut on 20 September 2010, for capturing a whopping 52% of the market share on its very first day coupled with a world record for the most contracts traded in a single trading day. This has turned out to be a flash in the pan.
The USE clocked a turnover of Rs45,486 crore on its debut, outshining rivals NSE and MCX-SX who recorded a turnover of around Rs21,000 crore each. Volumes continued to hold steady for a few days as the USE maintained a leadership position in the segment with a market share of 38% by 6th October.
However, this superlative performance soon started losing steam. USE witnessed a steady dip in volumes and turnover since this 'big-bang' opening. With a turnover of just Rs4,142 crore on 11 November 2010, USE has seen its market share plunge to 18%. Indeed, since 1 November 2010, its market share has averaged just 15% while NSE and MCX-SX enjoy a much bigger slice of the pie at 37% and 48% respectively. Volumes and turnover on the much-hyped new currency derivatives exchange have almost halved from mid-October 2010.
Another important indicator of the failure of the USE is its low average open-interest position relative to volumes. Since its launch, daily open interest has averaged a measly 5% of the total daily volumes at the USE. Comparatively, the figure is much healthier at the NSE (38%) and the MCX-SX (30%). Open interest is the total number of futures contracts that have not yet been offset or fulfilled by delivery. It is an indicator of the depth or liquidity of a futures market and commitment of the participants. Low volumes and low open interest point to a shallow market, one that is dominated by day traders. In this case, a large part of such volumes are possibly created by Jaypee Capital, a stock broker that SEBI quite happily, allowed to be a promoter of an exchange.
After making a splash initially, the USE now faces an uphill task trying to keep pace with its bigger competitors. Unless it makes some changes to its revenue model and introduces some innovations soon, it could end up the same way as the Bombay Stock Exchange's (BSE) failed currency derivatives segment. The BSE, which has a 15% stake in USE, had set up and shut down its own currency-derivatives market within a matter of months. Unfortunately, there is no revenue model possible for this segment.
The USE is forced to impose zero transaction fees in line with the predatory move made by NSE earlier, and followed by MCX-SX. In doing so, the nascent exchange is already burning a lot of cash with each passing day. This works out for the NSE as it can use its highly profitable equity segment to subsidise the currency segment. But even for an established player like the MCX-SX, it hurts business badly. The MCX-SX, which had dragged the NSE to the Competition Commission for its anti-competitive strategies, has already incurred a loss of around Rs120 crore, reveal sources. In one of its lawsuits, it has said that it is losing Rs5 crore a month. For a relative newbie like the USE, the situation is dire. If it incurs the same costs as the NSE and the MCX-SX, its net-worth would get eroded rapidly.
Surprisingly, the USE continues to maintain a stoic silence when asked about its revenue model, despite repeated attempts on our part.