With the crucial Aadhaar Bill being passed in the Lok Sabha earlier this week, an international consulting firm in its survey today said that banks and telecom operators can potentially save an estimated Rs 10,000 crore over the next five years by using Aadhaar enabled e-KYC process for customer acquisition.
Besides substantial cost savings for banks and financial institutions by opening bank accounts and registering new customers, Aadhaar enabled e-KYC is significantly more efficient compared to current paper-based KYC, said MicroSave, a development consulting firm, in its survey.
"If e-KYC is adopted for customer on-boarding by banks (for savings bank account opened through branches and alternate channels) and by MNOs (for pre-paid mobility), an estimated Rs 10,000 crore can be saved over the next five years (by 2021)," the study said.
Customer enrolment processes followed by banks also take longer time and it can be two to four weeks before an account is activated. Whereas Aadhaar e-KYC enabled bank accounts can be activated and ready to transact in a few minutes.
Given that e-KYC provides near instant verification of customers' identity and their address, substantial cost reduction can be achieved through elimination of paper based verification, movement and storage being replaced by digital processes.
In order to avoid repeated KYC verification for customers availing multiple services, there is a need and an opportunity for greater harmonisation of KYC processes across diverse financial institutions and indeed with players in the telecom sector. This will speed up the process and result in massive cost savings, the survey said.
Leakage in subsidy has been a grave concern for India's exchequer for years. Hence, linking bank accounts to a unique social identity number will help plug the spillage.