The Supreme Court's historic ruling on Aadhaar yesterday, which said that there is no need to link the 12-digit biometric number with mobile numbers and bank accounts, is likely to saddle telecom operators and banks with longer processing time for new accounts and connections. That apart, their customer acquisition costs may go up, too.
As per industry estimates, over 80% of new subscribers are being enrolled using the Aadhaar e-verification process. "With enrolment via Aadhaar, we took 30 minutes to get a customer on board and now one will have to wait for 5-6 days for our officers to go to their addresses and verify their details. It seems like we have gone back in time and now enrolment will happen slowly, like the earlier times," a senior executive of a private telco told The Economic Times. Furthermore, telcos' rural expansion drive may take a hit with the inevitable delays in registration.
Citing sources, the daily added that the cost of enrolling a new mobile customer could shoot up 10 times. With Aadhaar, the cost was pegged at about Rs 30 per new subscriber. But with verification going back to old ways, the telcos will have to send agents to every household - possibly making multiple trips - so the cost is expected to jump to Rs 250-300.
That's a worrying development for the sector that has been battered by price wars over the past two years that eroded profitability and forced consolidation in the space. The Cellular Operators Association of India's (COAI) annual report for FY18 noted that the telecom operators are in "severe financial distress" with a cumulative debt of Rs 7.7 lakh crore and revenue under Rs 2.5 lakh crore.
"We are still going through the SC verdict. We will decide on what to do and how to go about things once we have completely grasped the verdict," Telecom Minister Manoj Sinha told the daily.
The Supreme Court's ruling will also impact the new small-finance and payment banks that aggressively used Aadhaar to complete the mandatory know-your-customer (KYC) process for new customers in a quick and cost-efficient way. Prepaid payment issuers, too, will face a setback. All these players will now have to figure out alternate ways of on-boarding new customers.Consider Ujjivan Small Finance Bank, which launched operations in February 2017 and has so far on-boarded over 7 lakh customers using tab banking and the Aadhaar network. "This process was quick, automated and cost-efficient," Ujjivan's CEO Samit Ghosh told the daily. "Now, we will have to work out a new manual process which will be costly and will take more than half-an-hour per customer compared to just 10 minutes now."
According to these lenders, having to turn to paper-based KYC will not only prove costly and time-consuming for them, but may also throw up security risks.
A major rethink is on the cards for the larger commercial banks, too. For instance, Kotak Mahindra's 811 account, SBI's YONO savings account, and Standard Chartered Bank's digital account used the Aadhaar number to open savings accounts instantly.Edited by Sushmita Agarwal