MUMBAI/NEW DELHI: The government's plan to make the Aadhaar number the centrepiece of the cash-transfer system is now facing opposition from a new quarter: banks. Several banks, led by State Bank of IndiaBSE 1.45 %, have expressed reservation against jettisoning their current systems in favour of the platform created by the Unique Identification Authority of India (UIDAI), which issues the Aadhaar number and wants to make it the basis to authenticate an individual's identity before every transaction in bank accounts into which welfare benefits are deposited.
These new lines of conflict are throwing posers to, and could even delay, what is being seen as UPA's gambit for the next general elections, due in 2014: universalisecash transfers.
The banks' reservation to the UIDAI authentication platform, built along with the National Payments Corporation of India (NPCI), a payment gateway, centres around two points.
One, banks want the UIDAI to bear all liabilities related to 'false identification' — an individual's complaint that someone else withdrew money from her bank account. "Till this issue is sorted out, we cannot use this system," says LP Rai, deputy general manager, rural business (IT-P&SC), SBI.
Two, UIDAI wants banks to retool their respective systems in line with its own, which is 'inter-operable' — accountholders can transact on a handheld machine of any bank, as with ATMs now. While some banks, including SBI, accept a common system is the way to go in the long run, they are questioning the need to make this shift today, particularly in the absence of safeguards that protect their interests. "You will hardly find inter-operability in villages," says K Unnikrishnan, deputy chief executive of Indian Banks' Association (IBA), the lead grouping of banks.