Five Indian banks have launched Saral Money, an instant prepaid card service that allows users to open a bank account using their Aadhar card for know your customer (KYC) validation, with payments company, Visa, reports The Hindu.

Currently, SBI, HDFC Bank, ICICI Bank, Indian Overseas Bank and Axis Bank are participating through payments company, Visa to support the initiative in Delhi – NCR. The service will be offered, in stages, in the rest of the country by the end of 2014.

Our readers might remember that speaking at the #NAMA conference, Nandan Nilekani, Chairman of UIDAI, had announced the launch of Aadhar E-KYC powered instant prepaid accounts, for which a pilot project was conducted in New Delhi. He had also stated that UIDAI had partnered with 20 banks, and had tied-up with the NPCI (National Payments Corporation of India) and Visa for payments powered by Aadhaar enabled E-KYC (Electronic- Know Your Customer). The Aadhaar powered E-KYC (Electronic- Know Your Customer), utilizes the E-KYC APIs, to allow citizens to avail different services without carrying any physical identification proof. To conduct an E-KYC check, an E-KYC request, along with Aadhaar number and authentication is sent as an input and the name, address, date of birth, gender, and photograph, is received by the agency. (Full video here)

How to get the card: Users can get the saral money debit card from grocery shops and bank branches for a nominal fee. As of now it’s not clear how much the bank or the business correspondent will charge for the pre-paid card. Users need to produce their Aadhar card for biometric validation. Once validated, they can load cash into the prepaid card, or receive cash transfers from the government and payments from individuals who have an Aadhaar.

The saral money debit card users can withdraw their money from any ATM, any Micro ATM using biometric authentication provided by Aadhar, through a bank branch, or access their money through the internet and mobile phones, and make payments. The Visa network integrates and links the different systems being operated by banks with the Aadhar database, hence the system is bank and region agnostic and can be implemented with all banks and in all regions.

Delhi Annashri Yojna: Apart from the saral money initiative, the government has also decided to implement cash transfer mode with the help of Aadhar numbers for its food security programme, Delhi Annashri Yojna. The food security programme will be launched on December 15, 2012.

Implications: The saral money service essentially brings banking facility for the large unbanked population of India. For the government, it also means keeping a track of how money exchanges hands. Nilekani had informed us at the #NAMA conference that around 20 crore people already have an aadhaar number and the UIDAI intends to enroll an additional 100 crore residents, over the next few years. Providing an easy banking facility using an Aadhar card might help UIDAI in enrolling more people.

Other Aadhar related developments

The Indian Prime Minister had launched an Aadhaar enabled service delivery platform, enabling citizens to use the Aadhaar identity platform to identify and authenticate themselves for delivery of benefits/services by various government or private agencies.