Cooperative Banks to Offer Aadhaar-Based Digital Services under New Framework

The government has introduced a revised framework that will allow cooperative banks to use Aadhaar-enabled payment and eKYC services, helping to extend digital financial services to rural and semi-urban areas; Economic Times reported.

The new system, designed by the Unique Identification Authority of India (UIDAI) in consultation with the Ministry of Cooperation, NABARD, NPCI and cooperative banks, addresses long-standing compliance and cost issues that had prevented many cooperative banks from using Aadhaar authentication.

How it Works
Under the new structure, only the 34 State Cooperative Banks (STCBs) will need to register with UIDAI as Authentication User Agencies (AUAs) and eKYC User Agencies (KUAs). The 351 District Central Cooperative Banks (DCCBs) can then use the Aadhaar infrastructure of their respective state banks. This change removes the need for each district bank to build its own expensive IT systems.

What Officials Said
Cooperation Ministry Secretary, Ashish Kumar Bhutani, said the move would “significantly expand the reach of financial inclusion to rural and semi-urban India, in line with the government’s vision of inclusive growth through cooperation.”

UIDAI CEO, Bhuvnesh Kumar, described the framework as “robust and forward-looking,” adding that it would make it much easier for cooperative banks across the country to adopt Aadhaar-based services.

Shaji KV, Chairman of NABARD, also pledged full support to cooperative banks as they implement the new system.

Wider Participation
The announcement was made at a workshop in New Delhi, attended by representatives of all STCBs and DCCBs, with more than 500 participants also joining online.

Why it Matters
This initiative is expected to make cooperative banks stronger, more self-reliant and better equipped to serve millions of people in rural India who depend on them for banking services. It is also a major step forward in the government’s goal of promoting financial inclusion through digital tools.