The Unique Identification Authority of India (UIDAI) is the agency of the Government of India that is responsible for implementing Aadhaar. The UIDAI was formed under the Planning Commission by an executive order issued in January 2009. The agency was established in February 2009, and owns and operates the Unique Identification Number database. It was created as an authority until a law was passed by Parliament.

The authority provides a unique identification number to all persons residing in India without identity cards. The agency will maintain a database of residents containing biometric and other data, and is headed by a chairman, who holds a cabinet rank. The UIDAI is part of the Planning Commission of India. Nandan Nilekani was appointed as the first Chairman of the authority in June 2009 and resigned from the post in March 2014 to contest the Lok Sabha election. The then government extended the term of Vijay Madan,a 1981-batch IAS officer to continue as the director-general and mission director of UIDAI.The Central Government has been unable to secure statutory approval for the authority after the National Identification Authority of India Bill 2010 was rejected by the Parliamentary Standing Committee on Finance as “unethical and violative of Parliament prerogatives”

The statutory board of enquiry for Delhi Development Authority has dumped the change of land use for UIDAI’s proposed headquarters on a petition by the convenor of India Against Corruption. Complainant had claimed that the prime property in central New Delhi worth Rs. 900 crore was leased to UIDAI at trifling price. Currently UIDAI operates out of offices in New Delhi’s Connaught Circus. Since UIDAI is not an authority, its nodal agency, the erstwhile Planning Commission, was responsible for providing UIDAI’s infrastructure. Currently UIDAI is operating under the newly constituted NITI Aayog The land was owned by 2 telecoms, BSNL and MTNL, which were locked in a court dispute.

The key features of Aadhaar-enabled micropayments outlined are as follows:

  1. UIDAI Know Your Residence (KYR) suffices for Know Your Customer (KYC): Banks in India are required to follow customer identification procedures while opening new accounts, to reduce the risk of fraud and money laundering. The strong authentication that the UIDAI will offer, combined with its KYR standards, can remove the need for such individual KYC by banks for basic, no-frills accounts. It will thus vastly reduce the documentation the poor are required to produce for a bank account, and significantly bring down KYC costs for banks.
  2. Ubiquitous BC network and BC choice: The UIDAI’s clear authentication and verification processes will allow banks to network with village-based BC’s such as self-help groups and kirana stores. Customers will be able to withdraw money and make deposits at the local BC. Multiple BC’s at the local level will also give customers a choice of BC’s. This will make customers, particularly in villages, less vulnerable to local power structures, and lower the risk of being exploited by BC’s.
  3. A high-volume, low-cost revenue approach: The UIDAI will mitigate the high customer acquisition costs, high transaction costs and fixed IT costs that we now face in bringing bank accounts to the poor.
  4. Electronic transactions: The UIDAI’s authentication processes will allow banks to verify poor residents both in person and remotely. Rural residents will be able to transact electronically with each other as well as with individuals and firms outside the village. This will reduce their dependence on cash, and lower costs for transactions. Once a general purpose Aadhaar-enabled micropayments system is in place, a variety of other financial instruments such as micro-credit, micro-insurance, micro-pensions, and micro-mutual funds can be implemented on top of this payments system.
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