India Stack

India Stack refers to the ambitious project of creating a unified software platform to bring India's population into the digital age. Its website describes its mission thus: "India Stack is a set of APIs that allows governments, businesses, startups and developers to utilize a unique digital Infrastructure to solve India’s hard problems towards presence-less, paperless, and cashless service delivery"[1] Of the four "distinct technology layers" mentioned on the same page, the first, the "Presenceless Layer" is the most controversial as it involves storing biometric data such as fingerprints for every citizen. Since such markers are widely being adopted to enable cashless payment, the issue arises of fraudulent use of biometrics.[2] Whereas one can change a PIN which has been disclosed, one can't change one's fingerprints. The other layers are the Paperless Layer, which enables personal records to be associated with one's online identity; the Cashless Layer, a single interface to all national banks and online wallets; and the Consent Layer, which aims to maintain security and control of personal data.

India Stack is the largest open API in the world. Since its deployment, India has been organizing hackathons to develop applications for the APIs.[3]

India Stack is being implemented in stages, starting with the introduction in 2009 of the Aadhaar "Universal ID" numbers. These are linked to biometrics (fingerprints) and as time goes by, authentication by Aadhaar is required for access to more and more services and subsidies. This raises issues of privacy and surveillance, especially as much of the users' interface is via their mobile phones.[4][5]

The next stages were the introduction of eKYC (electronic Know Your Customer), which enables paperless and rapid verification of address, identity etc., followed by e-Sign, whereby users attach a legally valid electronic signature to a document, and UPI (Unified Payments Interface) enabling cashless payments, and most recently, DigitalLocker, a platform for issuance and verification of documents & certificates.

What raised the profile of Aadhaar and India Stack worldwide was the recent "demonetisation" whereby 500 and 1000 Rupee notes were phased out, officially to eliminate forgeries and money-laundering, but with the secondary objective of hastening the transition to a cashless economy.

Observers have argued that India Stack could fast-track the move to digital payment systems across the developed world and mark the end of cash.[6] However, various challenges related to user rights have been mounted: in August 2017 India's Supreme Court unanimously ruled in favour of a petition applying for privacy to be declared a fundamental right[7] and other court matters followed.[8]

First pilot of India Stack

To test all 4 layers- Presenceless, paperless, cashless and consent- of India stack, the India Stack team partnered with the largest FinTech alternative credit company in India, Capital Float in 2016.[9] The objective of the pilot was to provide loans to customers in a few minutes and in the comfort of their own house. Additionally, the target customer was someone with no collateral and limited data trail. When a user opened the application, he/ she had to give consent for Capital Float to access his/ her data through the digital platform (Consent). Once the consent was given Capital Float used the Aadhaar infrastructure to authenticate the users (presenceless). The Aadhaar also helped with e-KYC, a mandatory requirement for all loan activities in India. Once the authentication was complete, Capital Float pinged the Aadhaar data base to check for banking activity, and also used a mobile scraping technique to gather data from the customer's phone. These two steps helped Capital Float estimate the credit-worthiness of the customer. Once this was determined, the customer of the application saw loan offers on the screen. The customer could then select the offer and do an e-signature within the comforts of their home (paperless). This whole process could be completed in 45 seconds. Once the loan was approved it could directly be disbursed into the bank account of the customer (Cashless). The pull function of the UPI platform could also be utilized by Capital Float to get back the loan payments.

After the Pilot, the India Stack team has approached other alternate lenders to utilize the platform to give loans to under-served populations. Capital Float is already in the process of expanding the pilot in to a full fledged service offering. This pilot proved a clear value proposition of the India Stack platform for the FinTech industry.


References
  1. "India Stack". Indiastack.org. 20 February 2017. Retrieved 2017-06-30.
  2. "India Utilizing Citizens' Biometrics". Pymnts.com. 20 February 2017. Retrieved 20 February 2017.
  3. John Mauldin (2017-03-29). "Raoul Pal, Paying Attention | Outside the Box Investment Newsletter". Mauldin Economics. Retrieved 2017-06-30.
  4. Ramesh, Randeep (16 September 2009). "1.2bn population of India to be given biometric ID cards". The Guardian. Retrieved 21 February 2017.
  5. "Is India's central database with biometric details of its billion citizens a privacy nightmare?". Mashable.com. Retrieved 2017-06-30.
  6. "India Is Likely To Become The First Digital, Cashless Society". Forbes.com. Retrieved 2017-06-30.
  7. "Right to Privacy a Fundamental Right, Says Supreme Court in Unanimous Verdict". The Wire. 24 August 2017. Retrieved 19 May 2018.
  8. "Aadhaar Isn't Just About Privacy. There Are 30 Challenges the Govt Is Facing in Supreme Court". 18 January 2018.
  9. http://pn.ispirt.in/ispirt-the-india-stack-pilot-commercialization-of-techno-creative-innovations/
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