Ram Sewak Sharma, Chairman, TRAI explains about the electronic KYC and how 970 million people of this country have been using this as a unique and authenticable identity on a digital platform.
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NewsTranscript
00:00 If we can create an identity which is digital, then you see that identity could actually
00:14 become one of the ingredients of enabling digital transactions to take place.
00:19 Because you know, I used to see an old cartoon in which there is a dog which is sitting in
00:28 front of a computer and there is another on the chair and another dog which is sitting
00:33 below and the other dog is saying, "Oh, on the internet nobody knows that you are a dog."
00:38 Because proving identity on an internet is a very difficult stuff, is a very difficult
00:43 position.
00:44 So we said, let us create an identity which is actually digital identity.
00:49 So I somehow humbly disagree with my friend that America has got digital identity and
00:54 we don't have.
00:55 In fact, America does not have digital identity and we have.
00:58 So that should be understood very clearly and we have that at a scale.
01:03 970 million people of this country have an identity which is unique, which is authenticable
01:11 on a digital platform, which actually every domain in this country, whether it is a mutual
01:17 fund fellows or whether it is a bank or whether it is insurance companies or anybody, they
01:21 can just don't bother about the verification of the identity.
01:24 They are now absorbed from the responsibility of identifying a person because that job is
01:30 being done by Aadhaar and in a way which is digital.
01:35 So you enter into a transaction and straight away you get the KYC, electronic KYC, which
01:41 is your digitally signed document which says that this is the person who, you know, it
01:47 is my proof of identity.
01:49 So I think this is very, very phenomenal and very important from the perspective and we
01:55 at that time when we were starting Aadhaar, we did not realize, we realized the issue
02:00 of inclusion, we realized the issue that, you know, it is, lot of people don't have
02:05 any proof, documentary proof of ID and therefore we need to create a system which is inclusive,
02:12 which means that you don't require one ID paper to create Aadhaar.
02:18 Even if you have none, you should be included and you should be provided Aadhaar because
02:23 you are a person who exists.
02:26 So this is the system which we designed.
02:29 We also designed a system using technology to ensure that this identity is unique.
02:34 So suppose somebody who doesn't have an identity comes to us and say I am X, okay fine, you
02:39 are X.
02:40 So we provide him identity who is X and of course you need to have some documents written
02:45 by some MLA or some local fellow, if you don't have anything, then some kind of, you know,
02:50 your certification of the photo that okay this is a person.
02:52 In fact we came up with the idea of an introducer similar to what you have in the bank where
02:58 I want to open an account, there is somebody who already has an account, he can introduce
03:02 me as R.S.
03:03 Sharma and I can open an account, that kind of, so we came up with that idea also.
03:08 So ultimately a system is created which is inclusive and the fact that it is inclusive
03:13 is proven by the fact that you have 970 million people out of 1.3 billion.
03:19 So there are barely about 5600 million which are 50 or 60 million, how many, 150 or 45,
03:28 450 million which is left.
03:31 So this is one part.
03:33 Secondly because it is a digital identity, therefore you can participate in any transactions.
03:40 Banking, for example, now look at the financial inclusion as a sector.
03:45 We all talk of, you know, today technology has made life very easy and yes, that is true,
03:50 technology has been started being used by the banking system but at the same time I
03:55 think the banking system has been rather slow in actually doing a financial inclusion to
04:02 the extent it should have done.
04:05 Somehow they have not realized that there is a huge money to be made at the bottom of
04:10 the pyramid.
04:11 They have always thought that because of the low transaction size which is just about 100
04:17 rupees, 200 rupees, that is the value of transaction, average value of a transaction, it is probably
04:24 not worthwhile, you can't make money because if the cost of the transaction is high then
04:32 you can't make it.
04:33 So let us take the example, if you are going to transact on the ATM, the average cost per
04:40 transaction is of the order of 20 rupees plus.
04:43 So if you are having a transaction of 100 rupees, somebody wants to withdraw 100 rupees
04:47 and if 20 rupees is the cost of the banking system, obviously it is not workable.
04:53 Similarly if you go to a bank and do the transaction, the cost turns out to be about 40 rupees plus
04:58 because of all the costs of real estate and all that building and manpower.
05:05 So therefore banking has not been able to become sustainable and profitable at the ground
05:16 level because of certain issues, because they have not been able to reduce the cost.
05:21 Thank you.