New Delhi: Aadhaar has emerged as an enabler for financial inclusion with 76% to 95% of new accounts opened in different states relying on biometric identification but steps are needed to improve continued usage of these bank accounts, says a survey that analysed three-year data from rural Andhra Pradesh, Rajasthan, and West Bengal.
The survey, State of Aadhaar Report 2017-18 done by international research firm IDinsight covering 13,669 household members in 21 districts of the three states between November 2017 and February 2018, noted that only 45-67% of account holders in these states continue to use them.
Zero-balance accounts opened under the financial inclusion scheme Jan Dhan Yojana is a key tool for the government to deliver entitlements to the intended beneficiary. The survey sought to find out whether Aadhaar had aided unbanked individuals or households in opening a bank account and whether Aadhaar had made bank accounts easier to use, resulting in fewer dormant accounts.
Use of Aadhaar, the 12-digit biometric identity number issued by the Unique Identification Authority of India, is likely to widen for delivery of public services with the government planning major welfare schemes like the Ayushman Bharat National Health Protection Mission that will cover 500 million people.
Despite growing access to bank accounts among Indian adults, the survey found only a subset of accounts were actively in use—66.6% in Andhra Pradesh, 58.1% in West Bengal, and 44.9% in Rajasthan. “The next major challenge in financial inclusion is active participation in the financial ecosystem,” it said.
“As people start realising the benefits of transacting through the banking channel, gradually, usage of bank accounts will increase. It will improve their creditworthiness and access to more financial products,” said Kalpesh Mehta, partner, Deloitte India.