In August, Surai Mandi took up 16 days of work under the Union government’s Mahatma Gandhi National Rural Employment Guarantee Scheme in Jharkhand’s East Singbhum district. The daily wage of Rs 168 was not much, but his family depended on it to survive.

Mandi always received his wages under this scheme in his Bank of India savings account. But this time, the money – a total of Rs 2,688 – never came.

Mandi was among several Scheduled Tribe labourers in East Singbhum’s Boram block who were facing the same problem. After running from pillar to post, the workers discovered that their wages had been credited to their accounts at ICICI Bank, which they had barely operated in years. To make matters worse, many of their ICICI Bank accounts had been partially frozen. This meant the workers could not immediately withdraw their wages from there.

To unfreeze the accounts, bank officials demanded “e-KYC” – electronic Know Your Customer verification – of an account-holder’s identity through their 12-digit biometrics-linked Aadhaar number. After four months of running around and interventions by social workers, most National Rural Employment Guarantee scheme workers in Boram were able to finally unfreeze their accounts and withdraw their wages in December.

“But some workers’ e-KYC was rejected because of problems with Aadhaar verification,” said Siraj Dutta, a social worker with the Right to Food Campaign in Jharkhand. “Workers like Surai Mandi have not received their wages even today.”

In a video shot by Dutta in Dangdug village, Mandi claims that he could not withdraw his money from the “machine” (point of sale machine used for biometric verification). “I do not know the reason for this. The person says I will get the money later,” Mandi said in the video. Since the nearest ICICI Bank branch in the region is 40 km away in Jamshedpur, Mandi and other villagers cannot afford to travel there to complain, or withdraw their money.

Mandi’s plight is only the latest example of a problem that activists claim has been plaguing many parts of Jharkhand for the past two years.

In a letter to the Reserve Bank of India governor on January 24, Dutta claimed that irregularities in the National Rural Employment Guarantee Scheme wage payment were frequently reported across the state, often because of problems with Aadhaar authentication or the unethical linking of bank accounts to Aadhaar without the informed consent of workers.


Aadhaar Payment Bridge

In 2013, Jharkhand was one of the first states to link Aadhaar to bank accounts for National Rural Employment Guarantee Scheme workers to get their wages. Soon after, payments banks also began to make inroads in rural India. Payments banks are subsidiaries of larger companies that can operate basic bank accounts restricted to deposits of up to Rs 1 lakh per customer. In rural Jharkhand, ICICI Bank operates through its subsidiary, the FINO Payments Bank, which deploys bloc-level “banking correspondents” to travel around villages, enrol customers and carry out the bank’s functions.

“Most villagers [in Boram block] had old Bank of India accounts, but they signed up for ICICI too because the banking correspondents made it look appealing,” said Dutta. The accounts were opened with workers’ National Rural Employment Guarantee Scheme job cards as their primary identity document. However, since education levels in the region are low, most villagers have little understanding about the nature or use of those accounts.

Over the last few years, the Union government scaled up the use of the Aadhaar Payment Bridge System as a platform to transfer social welfare money to an Aadhaar-linked bank account. Each beneficiary was supposed to have at least one bank account linked to Aadhaar, but on the ground, banks came under pressure to link all accounts with people’s Aadhaar numbers. As beneficiaries came to have multiple Aadhaar-linked accounts, the system automatically transferred money to the account that was linked last.

This is how the National Rural Employment Guarantee Scheme wages of Mandi and other workers in Boram landed up in their ICICI Bank accounts without their knowledge or consent.

In September, a report found that community health workers in Chhattisgarh were facing similar problems, with their remuneration being transferred to accounts in the Airtel Payments Bank.


Authentication errors

In Jharkhand’s Boram block, the retrieval of workers’ National Rural Employment Guarantee Scheme payments from their ICICI Bank accounts brought to light other faults in the Aadhaar-based system.

For one, the rush to ensure Aadhaar-linkage for all bank accounts had led to errors such as incorrect data entry on the part of banks. In Surai Mandi’s case, said Dutta, his e-KYC was repeatedly rejected because Mandi’s name has been spelled differently in ICICI Bank records and on his Aadhaar card. A banking correspondent may have made the error while transliterating his name from the Devnagri script to English, but the error has led to Mandi facing five months of financial hardship.

Another resident of Dangdug village, Sonaram Soren, has not yet received his National Rural Employment Guarantee Scheme payment because of Aadhaar biometric authentication failure. A video shot by Dutta shows a FINO banking correspondent trying to verify Soren’s identity by taking his thumbprint on a point of sale machine. When the machine fails to recognise Soren’s fingerprints, the banking correspondent repeatedly asks him to rub his fingers on his clothes and hair, to no avail.

An ICICI Bank representative in Jharkhand, who did not wish to be identified, told that the bank had initially collected customers’ information indirectly, through the panchayat and block officials, while linking the accounts to Aadhaar. “In 2018, the RBI asked for Aadhaar linkage to be biometrically authenticated,” said the bank representative. This, he said, possibly led to the freezing of bank accounts while their Aadhaar-based KYC was completed. “A lot of people were initially hesitant to give their fingerprints for Aadhaar authentication, because there is a general distrust of private sector banks. This is why it took us long to fix the problem [of frozen accounts].”

But Dutta claims that the fault lies much deeper. Despite repeated complaints that several activists have been making over the years on behalf of various beneficiaries who have lost out on their payments, Dutta believes government workers are in denial about the magnitude of Aadhaar-related problems. “I met the block development officer and the lead district manager in November to ask them to address the NREGA payment issue in Boram, but they did not understand the scale of the problem,” said Dutta. “The BDO [block development officer] kept saying that FINO [payments bank] provides service to only 50 workers in the whole block, whereas one banking correspondent actually serves around 250 workers in a cluster of few gram panchayats.”

Banks, meanwhile, seem to be benefiting from the lack of literacy and financial awareness among their account holders. “I have seen banking correspondents ask villagers for Aadhaar copies and biometrics with no explanation given, and villagers have no clue what is happening,” said Dutta. “Taking the ‘consent’ of workers before linking their accounts to Aadhaar is just symbolic.”

Also read:

Looking for Modi: When Aadhaar makes your hard-earned money disappear down a rabbit hole

Aadhaar trouble: How a woman’s wages under MGNREGA were transferred to someone else’s account

At Jharkhand hearing, Adivasis describe how Aadhaar is a barrier to accessing food, pensions

Denied food because she did not have Aadhaar-linked ration card, Jharkhand girl dies of starvation

Corrections and clarifications: An earlier version of the article misstated the launch year of the Aadhaar Payment Bridge System.