Dehradun: When daily wage labourer A* of Karnal district in the northern state of Haryana approached a customer service point (CSP, also called mini-branch or kiosk) of the State Bank of India (SBI) soon after Holi in the summer of 2022, all he wanted was a zero-balance savings account for himself and some close family members.
A told the kiosk operator that they did not want any scheme that would involve any payments or deductions from their bank accounts.
The family was asked to return a week later, when the operator allegedly had them verify their fingerprints, already linked with Aadhaar, the national identity database, on his biometric device. He made them press a forefinger on his device, A said, many times.
“He kept verifying our fingerprints. We thought he’s opening our account,” A told Article 14. “We lost our money.”
This low-income family opened at least three Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts with Rs 500 each, one each for his mother, a cousin and an aunt.
On checking their mini-statement a few weeks later, they were shocked to learn that Rs 330 and Rs 12 had been debited from each account towards an annual premium payment for the Pradhan Mantri Jeevan Jyoti Bima Yojana, a life insurance scheme, and the Pradhan Mantri Suraksha Bima Yojana (an accident insurance scheme), respectively. Both are among prime minister Narendra Modi’s flagship social security schemes intended to provide financial security to the poor. Both are voluntary schemes.
In an investigation published in The Wire in December 2022, this reporter showed how banks have enrolled account-holders, without their explicit assent, in social security schemes. Operators of nine CSPs across three states confirmed that operators deceitfully activated schemes in bank accounts by obtaining customers’ fingerprints without telling them what the repeated fingerprint verification is for.
At the heart of these wrongful enrolments in welfare schemes is the Aadhaar-enabled Payment System (AePS) that facilitates access to banking services by authenticating an account holder’s biometrics—a fingerprint or an iris scan that is already linked with his/her Aadhaar.
In regions without bank branches, banking services are provided through CSPs that are run by independent workers or business correspondents (BCs) of banks, also called ‘bank mitra’ or friend of the bank. These BCs, engaged by private companies that banks outsource the operation to, do not earn a fixed salary. They charge a commission for every transaction, including cash withdrawals and deposits, and also have challenging targets to achieve, including for enrolment in social security schemes.
“AePS is a fountain of corruption,” noted economist and activist Jean Drèze told Article 14. “Nothing is easier than for a BC to extract money from a gullible customer’s account by pressing his or her finger on the PoS machine under some pretext.” Drèze, who has worked extensively to highlight grassroots-level issues with Aadhaar, said corrupt middlemen collude with BCs to exploit this loophole.
A’s kiosk operator in Karnal, Narender Kumar, told Article 14 that the insurance scheme is provided to everyone opening Jan Dhan accounts. “Banks provide so many services, so if something is done to Jan Dhan accounts, it’s nothing,” he said.
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Fingerprints By Fraud
BCs said theirs is a master-slave relationship with their employer and that these private companies could suspend them, terminate their service, limit their earning potential and withhold payments arbitrarily. Suspension/ termination letters available with Article 14 show that companies punished BCs for not meeting enrollment targets by disabling their monetary transactions, thus preventing them from earning.
On 1 October 2022, Aryavart Bank (a regional rural bank sponsored by Bank of India) ordered that monetary transactions of all its BCs be indefinitely suspended so that they focus on social security schemes alone and complete the enrollment backlog.
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Drèze said the scholarship scam in Jharkhand exposed by The Indian Express in 2020 used the same loophole of illiterate account-holders’ fingerprints being taken without clear communication of the purpose.
“... it is just the tip of the iceberg,” Drèze said, adding that the same method was being used to syphon funds from the Mahatma Gandhi National Rural Employment Guarantee Act labour budgets and pension money. “The victims are mostly poor people with little education, who are easily fooled by the BCs.”
While the AePS facilitates fraudulent enrolments, BCs said they faced threats and harassment from their employers.
A BC who runs an SBI kiosk in Buxar district of western Bihar sent Article 14 more than 100 mobile phone screenshots of conversations spanning four months on a WhatsApp group consisting of company representatives and several BCs. Through August and September 2022, the conversations showed at least 44 instances of senior officials of the company, Bihar-based Save Solutions, threatening kiosk operators with suspension or termination for failing to meet targets of enrollment in social security schemes.
One screenshot showed the BCs’ immediate supervisor, district coordinator Digvijay Narayan Mishra, telling them that if they did not have customers at their centres, they should approach people to open instant accounts and activate the accident insurance scheme on these by depositing Rs 20 into each account from their own pocket. This message was sent during an enrolment drive for social security schemes in September 2022.
Over a phone call, Mishra claimed he did not send this message, and also flatly denied threatening BCs with termination, though the screenshots showed otherwise.
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Not long thereafter, during a drive to open accounts with SBI, the Patna zonal head of Save Solutions, Brij Bihari Singh, told his district coordinators: “Whatever rulebooks you have, cast them away!” Singh did not answer calls and WhatsApp messages from Article 14.
One district coordinator said in the course of the same chat that he had instructed BCs to open as many accounts as needed. “We’ll deal later with whether they’re getting rejected,” he said. “We just want enrolment.”
Watch: Instruction to a banking correspondent
The BC who shared the video clip said it was indicative of his employer’s approach towards meeting targets, by hook or by crook. WhatsApp screenshots also showed that BCs were frequently told to “enrol people anyhow”.
How The Bank Mitra Are Hounded To Commit Fraud
In September 2022, a Bank Mitra from Sultanpur in Uttar Pradesh (UP) shared with acquaintances on WhatsApp a recording of a phone call in which his supervisor can be heard telling him to enrol customers in social security schemes without informing them, and to misguide them if they questioned him. The audio clip was shared widely on WhatsApp. Many local newspapers reported this case.
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Reports about growing pressure on kiosk operators and consequent unethical enrolments in social security schemes have been published by local dailies in Kaushambi (UP), Satna (Madhya Pradesh) and Madhepura (Bihar) too.
On Sundays and on days when festivals are being observed too, companies hound BCs to add customers to social security schemes.
WhatsApp screenshots and video clips of online meetings showed Patna zone district coordinators of Save Solutions complaining that they were under pressure from the company; company officials saying they were under pressure from the bank; and bank officials countering that they were under pressure from the government. In another clip of a video conference, an officer from SBI’s zonal office called for firing BCs who underperform on enrolment in social security schemes.
The Buxar BC said he and some fellow workers had begun to ask themselves how long they could put up with the daily threats, abuse and stress. He said a colleague now suffers from sleeplessness and headaches, and was prescribed medication. Article 14 also spoke to a BC who tweeted in August 2022 that he was on the cusp of suicide because of harassment by his company.
Citing their helplessness and customers’ reluctance to buy insurance, five BCs told Article 14 that they had been enrolling people in these schemes without their consent. They said 80%–90% of the enrolments they did were fraudulent. Every couple of months, they said, they enrolled 100–250 people for these schemes through AePS. Fearing reprisal from their company, all but one BC spoke on the condition of anonymity.
Article 14 asked SBI if companies that hire BCs can make them work seven days a week and suspend/terminate them for not meeting enrolment targets. SBI’s chief manager of the financial inclusion department, Ajit Kumar, said this was a matter between BCs and their company.
In an email, Kumar said fraudulent verification of fingerprints was only a remote possibility as voice prompt alerts are given to customers for each transaction at a kiosk. (An SBI BC told Article 14 that this is not in practice.) Kumar said the bank has taken several initiatives, including time lag between two AePS transactions, to check frauds.
Save Solutions’ media team did not respond to questions sent by email on 14 February.
The Impact Of Forced Welfare
While the union government’s accident insurance scheme costs only Rs 20 a year as premium, life insurance costs Rs 436 annually. The micro-pension programme incurs a monthly deduction, a sum that varies depending on the plan a customer has selected. In villages, where dependence on BCs is high, these monthly deductions and the Rs 436 a year paid as a life insurance premium can upset low-income families’ budgets.
The BC from Buxar shared an audio recording of a rural woman arguing with a kiosk operator over an unauthorised debit from her account. It was for the life insurance premium.
When the kiosk operator reasoned that it was only a small amount, the agitated woman was heard exclaiming: “But how do I afford it, maharaj?”
Another BC from Maharashtra who runs an SBI kiosk said many of their customers were labourers who earn a pittance and are hit hard by unplanned deductions from their meagre account balance.
“We have to be careful with even two rupees,” Haryana labourer A said, explaining that his family is too poor to spare even the Rs 20 for an accident insurance premium. “How do we pay when we do not have money in the first place?”
A recent video report from Jharkhand showed agitated villagers accosting a BC of Jharkhand Rajya Gramin Bank for activating social security schemes on their accounts. As one villager insisted that his money be refunded, the hapless BC blamed the bank for putting pressure on kiosk operators to compulsorily enrol customers in these welfare schemes.
All the BCs Article 14 spoke to regretted having to impose these schemes on financially weak fellow villagers. “He who cannot maintain even the minimum balance, how can he afford Rs 436 for insurance,” a former BC with Dakshin Bihar Gramin Bank said.
Authorities Evasive, Problems Pervasive
A Reserve Bank of India (RBI) circular dated April 24, 2008, said banks must closely monitor the implementation of the BC model and alert the apex bank so that corrective steps can be taken if problems arise.
However, BCs told Article 14 that their complaints to their bank’s branch manager and regional head were routinely ignored. One BC shot off a letter to the SBI chairperson, only for his company to ask him in writing why he should not be terminated for the act.
Ajit Kumar of SBI said in an email that the bank has a robust complaint redressal mechanism and all complaints are handled within the stipulated time.
In February 2019, Drèze and other researchers working on issues relating to loopholes in Aadhaar-based payments met the chief technology officer of the National Payments Corporation of India (NPCI) and two executive directors of the RBI. They later sent multiple letters to both agencies, highlighting ground realities, suggesting remedies and calling for urgent action.
Drèze shared with Article 14 six such letters, including one sent to RBI governor Shaktikanta Das. In 2021, Drèze and economist Reetika Khera—she has written a book on the issues surrounding Aadhaar—sent their recommendations to the Parliamentary standing committee on information technology. The duo also discussed these with the NPCI. Nothing came of these meetings and correspondence, Drèze said.
On the one hand, the NPCI website touts AePS as a technology that eliminates the threat of fraud but on the other hand, NPCI’s own circular dated 18 February 2022 acknowledges four ways in which AePS can be misused to commit fraud. This circular shows that the organisation is cognizant that Bank Mitra can defraud customers by deceitfully verifying their fingerprint.
Article 14 asked the NPCI how it will plug this loophole and what action it has taken on the inputs given by Drèze and his associates. The emails, dated 28 January and 8 February, remained unanswered. The RBI did not reply either.
On 28 January, Article 14 asked the Unique Identification Authority of India (UIDAI) the same questions: how it would check this malpractice; whether it was aware of the problem, especially in the wake of the Jharkhand scholarship scam; and how it would ensure that a fingerprint is not authenticated deceitfully in the rural belt, where levels of financial and tech-literacy are low.
The UIDAI sent a statement in response, regarding its efforts to create awareness around Aadhaar usage hygiene. “In order to make Aadhaar usage more secure, residents can avail features of lock and unlock of Aadhaar/biometrics on mAadhaar app or through UIDAI website,” it said. “Also, residents can view authentication history details in mAadhaar app or through UIDAI website.”
The UIDAI website maintains that no Aadhaar holder has suffered misuse. This despite the Union finance ministry telling the Rajya Sabha in 2018 that four government banks reported instances of swindling totalling Rs 1.4 crore via Aadhaar misuse. In a detailed report in 2022, Article 14 addressed multiple pain points of Aadhaar, including AePS.
Bank Mitra have been raising a stink about the social security scam on social media, tagging their bank, state ministers, Prime Minister etc., hoping someone would act. The secretary of an association of BCs—Manish Sharma of Bank Mitra Mahasangh, Bihar—said he has been vying to file a case in Patna High Court but is held back by lack of funds to rope in a lawyer.
Meanwhile, unfair enrolments continue at kiosks, said BCs, despite the Centre ordering all the banks in November 2022 to curb unethical selling of insurance.
* Name changed to protect A’s identity.
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(Hemant Gairola is an independent journalist based in Dehradun.)