Aadhar, Part 2: India Stack
The deployed Aadhar soon took
shape into what is now called India Stack. India Stack has 5 elements, as the
book, The
Aadhar Effect,
explains:
- eKYC:
an electronic KYC that would be acceptable proof of identity;
- Aadhar Payment Bridge: Your Aadhar ID became your financial
address. By definition, it would be unique for each person;
- eSign:
Digital signature that one could affix to documents;
- UPI:
Or Unified Payment Interface. “A platform on which payment apps can be built
and money transferred”. Examples include the government’s BHIM app, PayTm,
Google Pay and WhatsApp Pay;
- Consent Layer: To share personal data with, say, a bank, university or
employer for a limited period for a specific purpose.
Note that not all of these were
visualized by Nilekani himself, but he had designed the system in a way that
allowed for such innovations.
To see how all this adds value
when put together, take this example from the book: authenticate yourself via
Aadhar and OTP. Generate an eKYC and submit it the bank where you want to open
an account. Apply for a loan and the banks asks for proof of income etc:
provide that via the digital locker facility, DigiLocker. Once the loan is sanctioned, the money can be
transferred immediately via UPI.
Other applications of Aadhar
based systems are under way. Biometric authentication for all financial
inclusion programs that involve tax payers’ money. An RBI announcement made
eKYC legal for banks to accept, which in turn allowed more rural folks to
access the banking system. It also reduced KYC associated costs for banks.
We can also see second, third
and Nth order consequences of the India Stack. Just a couple of examples from
the book:
- Going
cashless became easier, when money could be transferred so effortlessly via
just a phone app. (And since not everyone’s phone has lots of memory, the
government’s BHIM app was just 3 MB in size)
- Vendors
to companies get paid much after they deliver the goods: this creates cash flow
problems for small vendors. But with DigiLocker records that were eSign’ed, one
could go to a bank and show them as proof that money was due, and take a loan
on that basis.
- Farmers
in drought hit Karnataka in 2017 got the relief money credited directly and
instantly to their Aadhar seeded bank accounts.
The butterfly had flapped its
wings, and the effects and possibilities were becoming clearer.
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