This is the final post for now introducing the question of financial inclusion. Barring some exciting new topic brought by next week’s events, I would like to turn back to the northeastern states of India and to the question of the migrant in coming days, and then to a close reading of Imagining India, the book by UID head Nandan Nilekani..
‘Aadhaar’ the unique identification number, will be aadhaar (support) to banks in not just one but three ways. Not only would it reduce the customer acquisition cost (estimated at Rs 150 an account), it would also reduce customer distribution costs and provide banks credible information for credit risk analysis in the years to come.
Participating in a panel discussion on ‘Profitable models for financial inclusion, agriculture and rural development’, Mr Rajesh Bansal, Assistant Director-General of Unique Identification Authority of India, said that by 2017, nearly 1.2 billion people in the country would be enrolled under Aadhaar.
As Aadhaar gives enrollers a choice to open bank accounts, Indian banks will have access to 1.2 billion customers in the country by the end of 2017, Mr Bansal noted. With this, 1.2 billion credit histories will be available which will in turn help banks to do better credit risk analysis, he said.
Stating that 11 crore people have already enrolled under Aadhaar, he said 3 crore people are being enrolled under the project every month. Around Rs 3-lakh crore of subsidy transfer opportunity is waiting to be unlocked post-Aadhaar, which dwarfs the Rs 22,000 crore currently being spent under National Rural Employment Guarantee Act (NREGA).
Since 1.2 billion people are expected to get the benefit of Aadhaar in the country, this will be a good KYC (know your customer) for bankers.
Post this panel discussion, Dr Subir Gokarn, Deputy Governor, in his speech, also noted the immense opportunity the ‘financially excluded’ offer.
According to a National Council for Applied Economic Research survey, around 42 per cent of the rural household’s have financial assets in the form of cash. The same proportion in urban areas is 23.4 per cent. This data, despite being dated (survey was done in 2005), would be of similar proportion even today, he opined.
While he used the reference of ‘know your customer’ transition to ‘grow with your customer’ strategy going forward for banks. It is very relevant in case of financial inclusion given largely untapped financial savings and other financial products.
So just a single point. Various state and bank officials promote UID/Aadhaar as an immense resource, a promise, a potential, a source of untapped wealth in the very form of the masses, the long-suffering material of Planned Development, its scary enumeration once a sign of biological catastrophe and the need for swift surgical reform. But here the mass in its enumeration is the source of previously disregarded wealth newly available through the technology of biometrically guaranteed identification. Wealth where before there was waste, a but like the Appalachian landscapes newly given over to the promise of fracking in North America.
Again, it is not simply that Aadhaar creates potential through the registration and formal sector control of previously untapped monetary reserves: but that Aadhaar creates a powerful new information reserve, 1.2 billion credit histories, a double expansion. The mass is reformed both as a source of minimal wealth that in its very massiveness will generate untold potential, and as a source of the radical expansion of information enabling new massifications of risk (sorry!), new control points enabling the presumptively effective management of the risk as poverty becomes the primary national resource for wealth, its marginality a resource for reframing the object of risk (“Know Your Customer”) itself.
Is this a problem? I’m not sure. Win-win situation? I’m not sure.