Pace of seeding Aadhaar numbers with bank accounts still a concern

The biggest problem is that those with Aadhaar numbers aren’t coming forward for seeding these with bank accounts

The issue of how to hasten seeding of Aadhaar numbers with bank accounts for those eligible for subsidies has again come to the fore, this time in the wake of the transfer of benefits for cooking gas.

Some wonder if it is the size of the transfer fee that is holding back banks from boosting the seeding. Some are also wondering where the transfer fee should be raised from one per cent to two per cent. At the current rate, the finance ministry expects to complete about a million liquefied petroleum gas (LPG) subsidy transactions through the Direct Benefits Transfer (DBT) programme by the end of June. This would involve transferring about Rs 40 crore (Rs 400 million).

Last Saturday, the DBT programme was launched for LPG. The petroleum and natural gas ministry said under the scheme, launched in 18 districts, about 250,000 LPG consumers who had booked cylinders had received the advance in one week. Till June 8, DBT transactions, amounting to Rs 10 crore (Rs 100 million), were carried out with about 30,000 DBT transactions being executed every day. And, the failure rate is below 0.5 per cent.

Yet, the fact remains the seeding level of Aadhaar numbers with bank accounts is just about 20 per cent, while the seeding of the LPG data base with Aadhaar numbers is 58 per cent. In these districts, Aadhaar penetration is about 90 per cent. Quite a few believe the problem is related to banks, and this has to be addressed without delay.

“Banks are asking for a higher fee, considering a lot of labour is involved in seeding accounts. People don’t come to banks voluntarily for seeding their Aadhaar numbers. Perhaps LPG subsidy will be a game-changer,” a bank executive said, on condition of anonymity.

C V R Rajendran, executive director, Bank of Maharashtra, said at the moment, transaction fee wasn’t the issue. The biggest problem, he said, was those with Aadhaar numbers weren’t coming forward for seeding these with bank accounts. “About 50 per cent of accounts in our bank are not seeded…The fee structure might need to be revised later, if most accounts are no-frills,” he said.

Last month, the government had decided to pay a commission of one per cent to banks on the total amount transferred under DBT. The fee is paid to compensate banking correspondents (BCs) who would help implement the scheme. The commission has been envisaged as an interim measure.

The finance ministry said the commission would be subject to the condition that after the next six months, banks would examine whether the amount transferred through BCs was more than or equal to the amount transferred under DBT. If it is found the amount transferred is less than what was transferred under DBT, the commission would be reduced proportionately.

Once technology to assess the value of transactions by BCs is in place, a commission of two per cent of the amount actually transferred through BCs under the DBT scheme would be provided.