Nandan Nilekani on Thursday explained to SEBI and capital market participants the role UID can play in financial transactions
Mumbai: The unique identification number (UID) the government plans to give to every Indian citizen is likely to replace the current Know Your Customer (KYC) process for all financial transactions, including opening of bank accounts and investments in securities.
Nandan Nilekani, the Chairman of Unique Identification Authority of India (UIDAI), held a meeting with capital market participants in the office of the Securities and Exchange Board of India (SEBI), to explain how UID would be relevant in capital market transactions, according to Business Standard.
This is the first step taken by UIDAI to eventually making UID the distinctive credential for all financial transactions. Nilekani is also in talks with the Reserve Bank of India (RBI) to allow banks to treat UID number, called Aadhaar number, as the only document for opening an account. UIDAI expects Aadhaar to become a portable identity for Indians and address the problem of identification on migration.
SEBI Chairman, C B Bhave, other members of SEBI board, mutual fund CEOs, stock exchange officials, investment bankers, brokers, registrars and depository participants attended the meeting.
Among those who attended the meeting, were Milind Barve, Managing Director of HDFC Mutual Fund, Sanjay Sharma of Deutsche Bank, who is also the vice-chairman of the Association of Merchant Bankers of India and S Subramaniam of merchant banker Enam.
“The meeting was a starting point for evaluating UID from the capital market perspective,” said a person who attended the meeting with Nilekani, according to the Business Standard report.
“We discussed how it could be applied (in stock market transactions). For instance, regulators wanted to know how it could capture change in the address of the investor, as a lot of corporate actions (dividends, AGM reports) require addresses of shareholders,” the report said quoting the unidentified person.
Unlike permanent account numbers (PAN) issued by the Income Tax Department, a person cannot hold two UID numbers as the system would also be capturing fingerprints and iris, the thin, circular structure in the eye that controls the diameter and size of the pupils as well as the amount of light that reaches the pupil.
UID was launched on September 29, when 10 residents of Tembhali village in Nandurbar district of Maharashtra, were issued Aadhaar numbers. According to UIDAI, over 600 million UIDs will be issued over five years.
UIDAI has successfully implemented on a pilot basis the Aadhaar project at Sindhudurg in Maharashtra, where nearly two lakh people have been issued Aadhaar numbers.
Delivering the 27th Sir Purshotamdas Thakurdas memorial lecture organized by the Indian Institute of Banking and Finance, Nilekani said if Aadhaar is made to stand for KYC norms, new accounts can exceed the number of accounts the country has opened so far ever since commercial banking was introduced 240 years ago.
