UIDAI Introduces Aadhaar-Based Authentication Framework for Cooperative Banks

The UIDAI (Unique Identification Authority of India) has recently launched a new framework to integrate all cooperative banks into the Aadhaar-based authentication system. Its main aim is to improve financial inclusion all over the country.

 

It is developed under the collaboration with the Ministry of Coorporation, the National Bank for Agriculture and Rural Development (NABARD), and the National Payments Corporation of India (NPCI). This framework will cover all 34 State Cooperative Banks (SCBs) and 352 District Central Cooperative Banks (DCCBs) nationwide.

Simplifies Onboarding and Reduces Cost

The main advantage of this framework is its cost-effectiveness and efficient structure. Now, Banks don’t have to develop or own a complex IT infrastructure. The 34 SCBs will need to register directly with UIDAI as AUA (Authentication User Agencies). The hundreds of DCCBs can use the Aadhaar authentication and IT infrastructure of SCBs.

 

This will eliminate the need to develop an IT system, which saves costs and simplifies operations.

 

Why Aadhaar-Based Authentication Framework essential for Rural Customers?

Cooperative banks are like a lifeline for the rural economy. They provide credit to farmers, support self-help groups, and serve as the first point of access to banking for millions of households.

 

With the Aadhaar-based Authentication Framework, cooperative banks will now be able to offer quick, secure, and paperless customer onboarding. Whether it is through biometric eKYC or face authentication. New accounts can now be opened in minutes instead of days. This is important in villages and small towns. Now, customers can receive government subsidies, pensions, and welfare payments directly into cooperative banks.

Benefits for Bank Customers

These are the benefits a bank customer will get:

Easy Onboarding: Biometric eKYC and face authentication enable paperless, hassle-free account opening. It will eliminate dependency on physical documentation.

 

Direct Benefit Transfers: Subsidies and welfare payments from state and central governments can now be credited into the cooperative bank account using Aadhaar as a financial address.

 

Enhanced Services: Banks will be able to offer services like the Aadhaar Enabled Payment System (AePS). It allows biometric-based cash withdrawals and deposits.

A Collaborative Approach

The rollout of the framework is the result of collaboration between UIDAI, the Ministry of Cooperation, NABARD, NPCI, and the cooperative banking sector itself. This joint approach confirms that the solution is not just technologically sound but also practical for banks.

 

According to officials, this initiative will bring cooperative banks closer to the standards of commercial banks to digital banking capabilities. While still allowing them to maintain their community-focused approach.

Conclusion

UIDAI has rolled out a new Aadhaar authentication framework for Cooperative Banks. This big step will make banking easier and accessible for rural India. With this framework, SCBs, DCCBs can provide faster, safer, and paperless services without the burden of high technology costs. Now, DCCBs don’t have to develop complex infrastructure. With shared infrastructure, SCBs and DCCBs can deliver Aadhaar-enabled services like eKYC, biometric authentication, direct benefit transfers, and AePS. It ensures that customers in villages and small towns can open accounts quickly and get direct government subsidies. The framework strengthens the role of cooperative banks but also supports India’s vision of financial inclusion and a digital economy.

FAQs

Ques: What is the Aadhaar-based Authentication Framework for Cooperative Banks?

Ans: It is a new initiative of UIDAI that helps SCBs and DCCBs to use Aadhaar authentication services without building an IT infrastructure.

 

Ques: Which institutions are covered under this Framework?

Ans: It covers 34 State Cooperative Banks (SCBs) and 352 District Central Cooperative Banks (DCCBs) across India.

 

Ques: Who are the Key collaborators?

Ans: The key collaborators are UIDAI, Ministry of Cooperation, NABARD, and NPCI.

 

Ques: Why is Aadhaar authentication important for cooperative banks?

Ans: It helps cooperative banks to provide secure, paperless, and quick customer onboarding, direct benefit transfers, and Aadhaar-enabled services.

 

Ques: What services can cooperative banks now provide using the Aadhaar Authentication framework?

Ans: These are the services that cooperative banks provide:

Paperless customer onboarding.

Biometric eKYC and face authentication.

Direct Benefit Transfer (DBT) of subsidies and welfare schemes.