Micro ATM's

• RBI has allowed banks to engage intermediaries, i.e. Business Correspondents (BC) to carry out specified financial transactions through public call office operators.
• The intermediaries would be provided mobile phone and fingerprint readers and would act as a Micro ATM to withdraw/deposit money across the country.
• Aadhar could emerge as a payment card linked to a savings account where government credits would be credited to the accounts directly.
• This enables banks to have immediate access to many more potential customers at the bottom  of the pyramid through Branchless Banking.
  But it requires substantial investment in technology.

Micro ATM's primarily performs following functions:

1. Cash Withdrawal.
2. Cash Deposit.
3. Balance Inquiry.
4. Remittances.

Advantages of Micro ATM's

1. Brings down the cost of cash management for banks.
2. Supports physical cash transactions at the local level.
3. Substantially reduce the risk to the bank. 

Suggested Column: http://www.thehindubusinessline.com/industry-and-economy/handouts/article4569777.ece

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Role of Aadhar in Banking System

• Unique Identification Authority of India (UIDAI) established by the Government of India is implementing the Aadhar scheme.
• Its objective is to implement Multipurpose National Identification Card or Unique Identification Card (UID Card)
• Head, Shri. Vijay S Madan (as on April 2014).
• Budget Rs 3,000 Crore.
• Objective to cover 60 Crore residents by 2014.
• Unique 12 digit number for every resident of India.
• Aadhar is used to prove identity not citizenship.
• Large number of residents, who currently don't have any identity documents and are therefore excluded from beneficiary list can also get an identity.

 Aadhar Enabled Payment System (AePS)

• Indian payment system developed by National Payment Corporation of India (NPCI) based on unique identification number. 
• The system allows an Aadhar holder to carry out financial transactions on a micro ATM provided by banking correspondence.
• Public Sector Banks already started entering MOU with UIDAI to act as Registrars for AADHAR project.
• Major constrains faced by the banks while opening of account is the absence of valid identity and address proof of the prospective customers.
• Aadhar number may be treated as substitute for KYC compliance which enables the banks to open accounts with a greater speed and accuracy.

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