Aadhaar Enabled Payment System – Coming soon – Live FIR and Dual SHG Authentication

 

Aadhaar Enabled Payment System – Coming soon – Live FIR and Dual SHG Authentication

FIR – In AePS, FIR stands for Finger Image Record, not ‘First Information Report’.!!

            NPCI-AePS team vide Cir No 22 dt.th August 2021 announced the rollout of XML Messaging specification for AEPS messages.

            The sunset date for existing the AEPS protocol i.e. ISO-8583 is 30^th April 2021.

            The XML messaging protocol will see two major initiatives i.e.

A)     Implementation of Finger Image Record (FIR) on financial off-us transactions which would detect liveliness in all authentication request

B)     Self Help Group (SHG) transactions will support dual authentication

The Aadhaar Enabled Payments System (AePS), which is used to distribute Direct Benefit Transfer (DBT) payments and domestic transfers for people under the Jan Dhan financial inclusion initiative, has used fingerprint authentication so far.

Aadhaar enabled Payment System (abbreviated as AePS) is a secured payment method formed by the National Payments Corporation of India (NPCI) facilitating the bank account holders to efficiently execute their banking/financial services such as money deposit, balance inquiry, cash withdrawals, etc. with the assistance of biometric based Micro-ATM.

Fingerprint scanners may be susceptible to spoofing using artificial materials, or in the worst case, dismembered fingers. An anti-spoofing method based on liveness detection is common amongst AEPS Micro ATMs.

For efficient transactions, the customers/users are simply required to furnish their 12-digits Aadhaar number to the officials of a bank and validate it through biometric fingerprint or iris scanner device.

      With the rollout of FIR, fraudulent transactions via spoofed images are greatly minimized.

SHG Dual Authentication: -

            SHG stands for Self-Help Groups. SHGs are an important part of Financial Inclusion in our country. There are numerous success stories associated with SHGs in our country.

            Each SHG has to open an account with a bank for its day-to-day financial transactions.

            To minimize fraudulent transactions in SHG bank accounts the MOP is by default Joint. This means a minimum of two SHG members should be added as signatories in the respective bank accounts.

To minimise inconvenience, usually Banks encourage SHGs add minimum three signatories, with MOP as ‘any two’.

And, now from 01/05/2022, SHG account signatories need not visit Banks for a wide ranging of banking activities.

They can simply visit AePS BCs, for the same.

The beauty of SHG Dual Authentication at AePS POS Terminals is that a wide range of Non-cash financial transactions can also be performed.

Net /Mobile Banking facilities are not allowed for SHG Bank accounts, as the MOP is always Joint.

The Internet Banking Services will be available in case of Joint accounts only if the mode of operation is indicated as ‘either or survivor’ or ‘anyone or survivor’ or ‘former or survivor’. For ‘former or survivor’ account, Internet Banking facility may be available only to the ‘former’

Hence, SHGs have to transact through the paper mode for majority of their banking transactions.

Way back in 2018, NABARD conducted successfully a Pilot project viz., “Bank Sakhi” in two RRBs in Uttar Pradesh and Madhya Pradesh on ‘Dual Authentication feature which makes it feasible for SHGs to transact at the BC point.

Dual authentication involves the development of a software patch both at CBS of the banks and micro ATMs at the BCs.

The Dual Authentication feature at AePS Micro-ATMs is a major step for digitizing SHG bank transactions. 

Action) SHGs can collect individual member savings through the Micro-ATM into its own savings account via a digitized fund transfer or directly by way of cash deposit into the group’s savings account.

Benefit: - SHG members need not travel long distances to deposit physical cash into its own savings account. They can just visit the nearest BC and deposit the cash via AEPS Micro ATMs. Other option for SHG member is to transfer funds from their own accounts to SHG accounts via the funds transfer option available in AEPS Micro ATM.

Action) SHGs can digitally transfer funds from its savings account to individual members’ savings account using the dual authentication facility.

Benefit: - SHGs need not issue physical cheques for funds transfer from SHG Account to member’s saving bank account. SHG Joint Signatories can just visit the nearest BC and complete the funds transfer via the dual authentication. Thereby freeing up time of SHG signatories and members for other income generation activities.

Action) SHGs can transfer funds from its savings account to CCL (cash credit loan) account using the dual authentication facility.

Benefit: – These will reduce the interest outflow in the SHGs CCL accounts, thereby increasing the overall profits for the SHG for reinvestment and distribution.

Action) SHGs can transfer funds from its own CCL account to the group or its individual member’s account directly using the dual authentication facility.

Benefit: - This will reduce the TAT for loan disbursements and ensure optimum funds usages by SHG members

 

Additional Readings:

Extract from - A Handbook on SHG - Bank Linkage DAY – NRLM

Quote

6.14 The following precautionary measures should be taken to promote transparency in the

transactions and downward accountability of the members

          The SB A/c shall be opened in name of the group and not in the name of any office-bearer

or member;

          Only members of the group should become the signatories to the bank A/c. No one other

than a member should become a joint signatory of the group A/c;

10. The SHG members hereby specifically authorize the representatives: -

i. To open Savings, Fixed Deposits and other accounts in

.........................................Branch of…………………………………. Bank approved by

the SHG and operate the same under the joint signature of any two of the following

authorized representatives:

2. The Savings Account may be operated by the joint signature of any two among the following representatives of our Self Help Group. A copy of the resolution taken by our Self Help Group in this regard is attached.

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Extract from_ NPCI_PROCEDURAL GUIDELINES FOR AADHAAR ENABLE PAYMENT SYSTEM_Version 2_Update September 2019

Quote

6.2.6 SHG Dual Authentication Transactions 5

A self-help group is financial intermediary committee usually composed of 10–20 local women or men. SHG promotes the small savings within the group. The savings are being kept with the banks. SHG usually have 2-3 leaders & these leaders are allowed to perform the financial transactions with banks on behalf of group. Transactions being performed are Cash Withdrawal, Cash Deposit from SHG’s account and Fund Transfer from SHG’s bank account to individual’s bank account. To facilitate the goal of financial inclusion, SHG transactions can be performed through the AePS channel.

For that Leaders’ of SHG Aadhaar authentication will be performed and post successful authentication transactions will be carried out. All stakeholders have to comply with SHG guidelines provided by sector regulators on time to time basis.

5 This is yet to be implemented

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Extract from World Bank Report:

Quote

Dual Authentication and Micro ATMs

As per the standard practice, all SHGs were mandated to open group accounts and a minimum of two group leaders (who were account signatories) was required to authorize operations such as withdrawals and fund transfers.

While early iterations of the micro-ATM system did not support multi-signatory authorizations, the dual authentication application evolved in consultation with partner banks, helped address this anomaly.

The BC/CSP in the village could now access the details of group accounts opened within the core banking system (CBS) as well as the biometric identities of signatories, online and in real-time through the Micro-ATM.

Individual savings accounts of members were linked with the group’s bank account in the CBS and transactions conducted by SHGs – such as withdrawals from or transfers to the member’s individual account – could be processed via the

Micro-ATM and biometrically authenticated by any two signatories present.

This process saves time and money spent on traveling to bank branches for SHG transactions.

SHG members receive prompt services and accurate digitized records of all financial transactions within the group.

Building individual credit histories with banks allow members to potentially graduate to direct individual loans in the future.

There is more transparency and increased trust as the operations take place in the presence of all SHG members and transaction receipts from the bank are instantly printed via the Micro-ATM.

Un Quote

Services offered by AePS: -

·         Withdrawal of cash

·         Balance Inquiry

·         Deposition of the amount

·         Acquiring mini bank statement

·         Biometric eKYC verification through certified fingerprint or iris scanner

·         Transferral of funds from one Aadhaar-linked bank account to another Aadhaar-linked accounts

 

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