Trapped by biometrics: The rise of banking scams in Rajasthan

In many villages of Rajasthan’s Bhilwara district, banking services such as transfers and withdrawals are often managed by business correspondents (BCs). People, especially those from marginalised communities who do not have smartphones, go to these correspondents to withdraw or send money through the Aadhaar-enabled payment system (AePS), which uses biometric data for verification.   

However, AePS, in combination with a lack of financial literacy among people, has led to a monumental rise in financial frauds. One of the most common fraud schemes involves deceiving people into completing biometric verification for a supposed withdrawal. They are then told that the bank servers are down, but in reality the BC withdraws money from their account without their knowledge.

Rukmani Bai,* a 70-year-old resident of Karda village, went to a local BC to withdraw INR 10,000. After a biometric verification was done to process the withdrawal, she was told by the BC that the servers were not working and that she should come back later. Since Rukmani does not have a mobile phone, she only learns about transaction updates when she goes to the bank to have her passbook updated. When she updated the passbook a month after this incident, she learned that money was indeed debited from her account. Upon inquiring with the bank, she was told that since she had completed a biometric verification, there was nothing that the bank could do.

Over the course of the next year, Rukmani had to frequently spend money on bus fare to travel to the main office of the bank in Gogunda. The paperwork for these cases is often complicated and drags on for a long time. With the bank evading all responsibility, Rukmani had to wait for months before the case was even opened for investigation. When a police case against the BC was finally going to be filed, Rukmani was told to drop the matter by her village panchayat. Since most BCs are affluent and belong to upper-caste families, they have considerable influence on village politics. For Rukmani, proceeding with a case against the BC meant social ostracisation, and so she decided not to pursue it further.

Similar instances have become commonplace all across Rajasthan.

While low financial literacy has played a big part in the increase of scams, the concerned authorities’ refusal to take any responsibility for the situation further exacerbates the problem. Even when authorities get involved, many victims like Rukmani who belong to marginalised castes are afraid of being cast out of the village if they raise their voice.

Kishan Gurjar is a branch service manager at Shram Sarathi.

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Know more: Learn more about the downside of collateral-free loans.
Do more: Connect with the author at kishan.gurjar@shramsarathi.org to learn more about and support his work.