Use of Aadhaar to help in financial inclusion: Rajan

RBI Governor Raghuram Rajan today welcomed Supreme Court ruling on use of Aadhaar card in more schemes and said it will help in financial inclusion drive and providing easy access to loans. "The Supreme Court ruling today on Aadhaar card will be quite helpful, making us use it in banking services. It will make easier for financial inclusion," Rajan told reporters after the central bank's board meeting here. With an UIDAI number, a person will be able to open a bank account as it will work as an identification document and will help in easier access to loans, he added. "UID will ensure that people will not get multiple loans from different places. We can make sure that it does not happen. This is an example on how we can make more lending possible," said Rajan, who was in the city for RBI's 554th Board Meeting. The Supreme Court today permitted voluntary use of Aadhaar card for schemes like MGNREGA, all types of pension schemes, PM's Jan Dhan Yojana and EPF. While modifying its earlier order restricting use of Aadhaar for PDF and LPG only, the apex court ruled that Aadhaar card scheme would be purely voluntary and not mandatory till the matter is decided by the court. "What we need is responsible lending and responsible borrowing, and much of our effort on financial inclusion is on how to make that happen," Rajan said. The Governor said it is easy to get loans in the present system but the focus is on how not to make those bad loans. "We have given enough power to banks to tackle NPAs. They must recognise, resolve and monitor future loans," Rajan said. He said small entrepreneurs and self-help groups can avail loans, but it should be taken care of that they don't fall in a "debt trap". Speaking about the meeting, Rajan said the board discussed about state of economy of India and also world economy. "We discussed regulations, ombudsmen and ponzi schemes. Wide variety of topics were discussed," he added.