1. Deposits and Accounts

Q: What are bank deposits, and why are they so important to banking operations?

A: Bank deposits are the money that customers keep in their bank accounts, and they form the foundation of banking. When you deposit money in a bank, it’s like you’re loaning your money to the bank for safekeeping. In return, the bank pays you a little extra money called interest for allowing them to use your funds. Deposits are crucial because they provide banks with the funds that can be lent out to other customers as loans. In essence, deposits are the lifeblood of a bank’s business model – banks borrow money from depositors (that’s you and me) at a lower interest rate and then lend it out to borrowers at a higher rate. The difference in these rates is how banks earn much of their income. Without deposits, banks would have no money to lend, and without lending, they couldn’t earn profits or serve the economic needs of the community. So, deposits are not just safe custody of your money; they’re the fuel that powers all banking operations. An easy analogy is to imagine deposits as seeds: they may sit safely in the bank’s “vault soil,” but they grow into loans that help others buy homes, start businesses, or go to college – fueling economic growth.

Q: What different types of accounts do banks offer for deposits?

A: Banks offer several types of deposit accounts, each designed for specific needs. The main deposit account categories are demand deposits and time deposits. Let’s break them down in simple terms:

• Savings Account: This is the most common account for individuals. It’s like an everyday piggy bank with the bank – you deposit your money and earn interest on it. Savings accounts are meant for personal savings and daily needs. They usually have limits on how many withdrawals you can make in a month (to encourage saving), but they pay you interest on the balance. The interest rate is modest, but the money is readily available (or “on demand”). It’s great for parking money you might need access to while still earning some interest.
• Current Account (Checking Account): This account is designed for frequent transactions and is often used by businesses, companies, or anyone who needs to write many checks or make frequent payments/withdrawals. Current accounts usually don’t pay interest (or pay very minimal interest) because they are meant for transaction convenience. Think of it as a checking account that facilitates day-to-day business operations. In return for no interest, current accounts allow unlimited withdrawals and often come with checkbooks, debit cards, etc. They are like transactional accounts – money flows in and out without restrictions. Businesses use these to manage cash flow. (In the context of India, you might hear “CA” for current account and “SB” for savings bank account.)
• Fixed Deposit (FD) / Term Deposit: This is a time deposit. Here, you deposit a lump sum for a fixed period (say 6 months, 1 year, 5 years, etc.) at a fixed interest rate. It’s like locking your money in the bank’s safe for a certain term. In exchange, the bank pays a higher interest rate than a savings account. The catch is you can’t freely withdraw the money before the term ends without a penalty. It’s great for goals or savings where you do not need immediate access to that money. Banks love FDs because the money stays with them for a known period, and customers like them for the higher interest. In India, FDs are very popular for earning a safe, guaranteed return.
• Recurring Deposit (RD): Think of an RD as the sibling of FDs meant for regular savings. Instead of one lump sum, you commit to depositing a fixed amount every month for a certain period (say ₹1000 every month for 2 years). It’s like a piggy bank where you add a fixed sum regularly. At the end of the period, you get back all the monthly deposits plus interest. RDs help instill disciplined savings habits and also earn a decent interest (usually comparable to FD rates). It’s perfect for people who want to save monthly towards a goal (like a gadget purchase, vacation, etc.) but also want interest on their savings.
• Others: There are some specialized accounts as well. For example, NRI Accounts for Non-Resident Indians (like NRE/NRO accounts) – these help Indians abroad manage money in India (these have specific rules and tax benefits). Another example is Payments Bank accounts (these are special banks in India that offer basic savings accounts with certain limits). While these specialized accounts exist, the core ones to remember are savings, current, fixed, and recurring deposits.

Each account type has different features, but all serve the basic purpose of keeping your money safe and paying you interest (except current accounts) while giving you the flexibility you need. The choice of account depends on whether you need easy access to your money (then savings or current is best) or you want to earn higher interest and can lock your money for a while (then FDs or RDs are suitable).

Q: Can a minor (a child) have a bank account? How do minor accounts work in banks?

A: Yes, banks do allow minors (children under 18 years of age) to have bank accounts, but there are special rules to protect the child’s interests. After all, banks want to encourage saving habits in children while ensuring the accounts are managed responsibly. Here’s how it typically works:

• Accounts for Young Children (Usually below 10 years): If the child is very young (for example, below 10 years old), they cannot operate the account on their own. In such cases, the account must be opened and managed jointly with a parent or legal guardian. The guardian’s name is linked to the account for operation. Essentially, the parent/guardian operates the account on the child’s behalf. For instance, if little Rohan is 8 years old, his savings account will be something like “Rohan (a minor) under guardianship of Raj (father).” Any withdrawal or deposit would typically require Raj’s authorization. The guardian’s KYC documents (Know Your Customer documents, basically proof of identity and address) are taken since the minor can’t provide these. According to banking guidelines, if a minor is too young, the ID proof of the person who will operate the account (the guardian) must be provided .
• Accounts for Minors Above a Certain Age (Typically 10 to 18 years): Many banks in India allow minors above 10 years old to operate a savings account independently, with some limitations. The idea is that by age 10, some kids are mature enough to use an ATM card or sign consistently. If the child can sign uniformly (instead of just a thumbprint) and the bank is satisfied, they may issue a minor-operated account. In this case, the minor’s own KYC documents (like their Aadhaar card, if available, or school ID, etc.) can be used. The account might have a lower spending or withdrawal limit to prevent misuse. Even though the minor operates it, a parent’s permission is usually taken at account opening, and the account might automatically convert to a regular account when the minor turns 18. Banks often brand these as “Kids accounts” or “Youth accounts,” sometimes bundled with features like a debit card with a low limit, or fun rewards for saving pocket money, etc. But importantly, if a minor is allowed to operate the account, the bank will do KYC for the minor just like for any other individual (verify their identity and address).
• What happens when the minor turns 18? When the child becomes an adult (18 years), the account is typically required to be updated to a regular account. The bank will usually call for fresh documents and have the now-adult person sign new forms. At 18, they can operate without any guardian. If the account was jointly with a guardian, it may be switched to sole name of the now-adult or continue as a normal joint account if they prefer.

In summary, minors can have accounts – under 10 the parent manages it entirely, and from 10–18 the child can get limited access under oversight. This way, kids can start learning about money. A real-world analogy: think of a minor’s bank account like a joint locker where a child’s treasure is kept – if the child is too young, the parent holds the keys; if the child is a bit older and responsible, they get a key of their own but the parent still has a master key just in case. All this is guided by RBI’s rules which ensure safety and proper identification for even the youngest customers.

Q: What about joint accounts between adults? How do joint accounts work in banks and why might people use them?

A: A joint account is a bank account shared by two or more individuals. It’s very handy for people who have shared finances – for example, a husband and wife managing household expenses, or an aging parent and adult child managing finances together, or business partners pooling funds. Joint accounts work on the principle that all named account holders have some degree of access to the money in the account, but the exact operating rules can vary based on the mandate given to the bank. Here’s how they generally work and why they’re useful:

• Either-or-Survivor vs Joint Operation: When you open a joint account, the bank will ask how you want the account to be operated. The two common instructions are “Either or Survivor” and “Joint (All) or Survivor.” “Either or Survivor” means either party can operate the account independently, and if one passes away, the survivor can continue to operate it . For example, if a husband and wife have an either-or-survivor account, each can withdraw money or sign checks without the other’s signature. If one dies, the other can still access the funds seamlessly (the bank just needs a copy of the death certificate to update records). This mode is convenient for most day-to-day needs because it doesn’t require both people to be physically present or sign every time – it’s like a joint locker where either key can open it. On the other hand, “Joint operation” (sometimes phrased as “Both to sign” or “All to Operate” if more than two) means every transaction needs signatures of all account holders. This mode is more restrictive – it’s like a locker that only opens when all key holders use their keys together. People choose this if they want mutual control (common in certain partnership firms or maybe in family situations to ensure consensus on withdrawals). If one holder dies in a joint-signing account, typically the survivor and the deceased’s legal heir would then have to jointly deal with the funds – it’s a bit more complicated because originally both signatures were required. Most personal joint accounts opt for “Either or Survivor” for convenience, while some special cases use joint-only operation for added security.
• Benefits of Joint Accounts: Joint accounts simplify shared expenses. For a married couple, it’s convenient to pay rent, utilities, groceries from one account that both can access, rather than constantly settling who pays what. It also promotes transparency – both can see what’s happening with the money. For an elderly parent and a child, a joint account allows the child to help operate the account (pay bills, withdraw cash) on behalf of the parent. In unfortunate events like death, joint accounts (especially either-or-survivor ones) ensure the surviving holder can immediately access funds without legal hassles or waiting — the account doesn’t freeze on one holder’s death (unlike a single account, which would get frozen until legal formalities by heirs are done). Essentially, joint accounts are a tool for financial collaboration and convenience among trusted people.
• Safety and Disputes: Because all parties have access, joint accounts rely on trust. Everyone named on the account has equal rights (unless specified otherwise) to withdraw money. So one risk is if one account holder goes rogue, they could drain the account. That’s why typically joint accounts are among family members or close partners where trust is high. Banks also allow you to add a “nominee” for joint accounts (and all accounts) – a nominee is someone who isn’t an account holder but is designated to receive the money in case all account holders pass away. Nomination and survivor instructions are important to simplify things in emergencies.

In short, a joint account is like a shared pool of money. Imagine a joint account as a joint locker with multiple keys: you decide if each person has their own key to use anytime (either/or) or if all keyholders must be present together to open it (joint operation). People use them for shared financial responsibilities and easy access. Just remember, shared access means shared responsibility – communication among joint holders is key to avoid any misunderstandings.

Q: How do banks calculate the interest on deposit accounts, especially savings accounts and fixed deposits?

A: Interest calculation can seem a bit math-heavy, but it’s actually straightforward once you break it down. Banks calculate interest on deposits in a systematic way, and in fact, the Reserve Bank of India (RBI) has guidelines to ensure fairness in how it’s done. Let’s tackle savings accounts first, then fixed deposits:

• Savings Account Interest: Historically, banks used to calculate interest on the minimum balance between certain dates (for example, earlier it was from the 10th of the month to the last day of the month – whichever was the lowest balance in that period would get interest). But that changed over a decade ago. Today, interest on savings accounts is calculated on a daily balance basis . What does that mean? It means every day, the bank looks at how much money you have in your savings account at the end of the day (your closing balance) and notes it. They apply the annual interest rate to that day’s balance to compute interest for the day. At the end of the interest period (usually every quarter), they add up the interest for each day and then deposit it into your account. RBI mandated this daily computation from 2010 onwards to make it fair for customers . So if you keep ₹10,000 in your account on Monday and ₹50,000 on Tuesday, you earn interest for Monday on ₹10k and for Tuesday on ₹50k, and so on. Each day’s interest accumulates until the payout. Most banks in India credit the accumulated savings interest quarterly (every 3 months) to your account. RBI has urged banks to do it quarterly to encourage regular interest compounding for customers (some banks might do it monthly or half-yearly depending on their policy, but quarterly is common). For example, if your daily balance was consistently ₹1 lakh and interest rate is 3.5% per annum, the interest per day is about ₹9.59, which over a quarter (~90 days) becomes around ₹863, which the bank would then credit to you. The key point: you earn interest every single day on whatever balance is in your savings account, even though you see it added only periodically.
• Fixed Deposit (FD) Interest: Fixed deposits typically have a fixed interest rate for the chosen tenure and the interest can be paid in different ways. If you choose cumulative FDs, the interest is not paid out to you monthly/quarterly, but instead it is compounded and paid at maturity along with principal. For cumulative FDs, banks usually compound the interest quarterly (some do it quarterly, some monthly – quarterly compounding is common in India). Compounding means the interest you earned in the previous quarter is added to the principal, and then that new total earns interest in the next quarter, and so on. This results in a higher effective yield than the nominal rate. There are also non-cumulative FDs, where the interest is paid out to you monthly or quarterly (as you choose) and not compounded. For example, a senior citizen might want quarterly interest payouts from an FD to use for living expenses – in that case the FD interest isn’t compounded because it’s given to them each quarter. Either way, FD interest calculation is straightforward: it’s essentially simple interest if paid out periodically, or compounded interest if reinvested. At the time of booking an FD, the bank usually tells you the maturity amount directly (principal + interest) so you don’t have to calculate manually.
• Recurring Deposit (RD) Interest: RDs are like a series of small FDs you add each month. Each monthly deposit in an RD earns interest from that point until the end of the RD term. Banks calculate the interest for each installment deposit for the remaining months. It’s a bit complex formula-wise, but effectively you get similar benefits as an FD. The interest rate on an RD is usually the same as that on an FD for the corresponding tenure.

One important thing to note: The interest rates themselves (for savings or FDs) are decided by each bank. Since 2011, RBI let banks set their own savings account interest rates (earlier RBI fixed it). So different banks might offer different rates on savings (though most major banks offer around 3-4% annually for savings accounts). For FDs, rates vary by bank and tenor and tend to be higher than savings interest because you’re locking the money in.

In summary, interest on savings accounts is calculated daily and paid periodically (e.g. quarterly) , ensuring you earn on every rupee every day. Interest on FDs/RDs is calculated for the deposit term – either paid out or compounded. If all this sounds a bit mathematical, just remember: keep money longer in the bank and you earn more interest, withdraw it and you stop earning on that part. The bank’s systems do all these calculations automatically in the background, following the formula and RBI’s rules, so you can just sit back and watch your money grow steadily (though slowly) with interest.

Q: When I went to open an account, the bank said I must fulfill KYC requirements. What is KYC and why is it needed?

A: KYC stands for “Know Your Customer.” It is a process and a set of government-mandated guidelines that require banks (and other financial institutions) to verify the identity, address, and other details of their customers. In plain language, KYC is the bank’s way of confirming “you are who you say you are.” Why is this important? For two big reasons: preventing fraud/illegal activity and complying with laws.

Think of it like this – if banks didn’t verify who you are, anyone could open accounts under fake names, and those could be used for bad purposes like laundering money, financing terrorism, or defrauding others. So, regulators (in India, the RBI) insist that banks thoroughly identify and authenticate each customer. In fact, in India it’s a legal requirement under the Prevention of Money Laundering Act (PMLA) 2002 and RBI’s Master Directions that banks must implement Customer Due Diligence (CDD) – which is essentially KYC – for all accounts . Sound KYC policies are critical for protecting the integrity of the financial system . Here’s what KYC typically involves when you open an account:


• Proof of Identity (POI): You’ll be asked for a document that proves your identity – usually something issued by the government with your photo. Common examples: Aadhaar card, PAN card, passport, voter ID, driving license etc. These help the bank know your legal name and who you are.

• Proof of Address (POA): Since many ID documents also have your address (like Aadhaar or driving license), often the same can serve as POA. But if not, they may ask for a utility bill, ration card, or another document that has your current address. This ensures the bank can reach you and knows where you reside.

• Photograph: Usually passport-size photographs are needed (though with e-KYC digital processes, the need for physical photos is reduced). The bank keeps a photo on record so they know what you look like – another verification layer.

• In-Person Verification: Traditionally, banks would verify these documents in person – e.g. a bank officer meeting you or you visiting a branch with originals. This is to ensure the documents belong to you and aren’t forged. With technology, things like video KYC have also started (where you verify your identity over a video call showing your documents).

• PAN Card: In India, for opening bank accounts (especially if you expect to do large transactions), PAN (Permanent Account Number), which is the tax identification number, is often required. If you don’t have PAN, you fill a Form 60. This is also part of KYC because it links your financial transactions to the tax database.

• Signature: The bank will take your specimen signature (or thumbprint for those who can’t sign) for their records.

All these steps ensure that the bank has enough information to uniquely identify you and assess any risk. KYC isn’t one-time either – banks will periodically update KYC records. For example, they may ask for fresh proof of address every few years or if regulations change.

From the bank’s perspective, KYC protects them and the financial system. It helps prevent accounts being opened under false identities, and it helps in tracking and reporting suspicious activities. For instance, if someone tries to launder money, law enforcement can trace it to a real person because of KYC records. For the customer, KYC is beneficial too – it makes it harder for a fraudster to pretend to be you. Yes, it’s a bit of paperwork or a few documents to submit, but it greatly increases security.

The Reserve Bank of India has been very strict about KYC norms. Since 2004, it made KYC mandatory for all new accounts . And as of 2016, we have a comprehensive KYC Master Direction that all banks follow. If you ever hear terms like “Full KYC” vs “Minimum KYC”, that relates to different levels of verification (for example, a mobile wallet might allow a limited account with just mobile verification as min-KYC, but a full KYC would require your documents and in-person verification).

So in summary: KYC = Identity verification. It’s like when you go to an exam hall and they ask for your ID card to ensure it’s really you taking the exam. Similarly, the bank is “examining” your ID to ensure you are a legitimate customer. It builds trust that the banking sector isn’t harboring phantom or criminal accounts. Every honest person has to do it – it’s a one-time (periodically updated) hassle for a lifetime of secure banking. In modern banking, KYC is the norm worldwide, not just in India.

Q: I heard the terms FATCA and CKYC while opening my account. What are FATCA and CKYC in banking?

A: Great question – these acronyms often confuse people. They are two completely different things: one is related to foreign tax laws (FATCA) and the other is about a centralized KYC registry (CKYC). Let’s decode each:


• FATCA: This stands for Foreign Account Tax Compliance Act. It’s actually a law from the United States (enacted in 2010) aimed at preventing tax evasion by U.S. citizens and residents who have money stashed abroad. What does that have to do with Indian banks? Well, under FATCA, foreign financial institutions (including Indian banks) are required to identify accounts held by U.S. “persons” (which means U.S. citizens or residents for tax purposes) and report certain information about these accounts to the U.S. tax authorities (the IRS). If banks don’t comply, they could face penalties on their U.S. transactions. India has an agreement with the U.S. to comply with FATCA. So, when you open an account in India, the bank will usually have a section in the account opening form asking “Are you a tax resident of another country? Are you a U.S. citizen or Green Card holder?” etc. If yes, there’s an additional FATCA declaration you fill, providing your foreign tax identification (like a U.S. SSN) and confirming you’ll comply with U.S. tax laws. For the vast majority of purely Indian residents, FATCA is not directly relevant – you just declare you’re only Indian resident and that’s it. But why it’s important conceptually: FATCA has effectively deputized banks worldwide to help catch U.S. tax evaders. In practice, an Indian bank will flag if someone is a U.S. person and report balances or interest earned by that person’s account. FATCA also led to broader CRS (Common Reporting Standard) under OECD, where banks ask for countries of tax residency for all customers (not just U.S.) to share info between countries. Summing up, FATCA is all about global tax transparency. It ensures that “Uncle Sam” (and other governments via CRS) know if their citizens have money in India . For a customer, it mostly means some extra checkboxes or forms during account opening if you have foreign affiliations.

• CKYC: This stands for Central Know Your Customer. It’s an Indian initiative (managed by CERSAI – Central Registry of Securitisation Asset Reconstruction and Security Interest of India, a government-owned registry) to streamline KYC across financial institutions. Remember how we talked about KYC where you give your ID and address proof to the bank? Earlier, every time you went to a new financial company (a new bank, or a mutual fund, or an insurance company), you’d have to submit those documents all over again. CKYC is essentially a central repository of KYC records. When you do your KYC with one institution and they upload it to the CKYC database, you get a unique CKYC number (14-digit). After that, any other financial institution can pull your KYC info from this central database using your number, rather than you having to submit documents again . It’s like a central KYC vault that stores your documents securely. For customers, this is super convenient – do KYC once, and reuse it everywhere. For institutions, it saves the cost and effort of re-verifying documents multiple times. CKYC was introduced in 2016 in India. Now, whenever you open a bank account or invest in a mutual fund, they often ask if you have a CKYC ID. If you do, KYC is a breeze; if not, they’ll do KYC and generate one for you. There are types of CKYC accounts too (like simplified or small accounts for those with limited documents), but the main idea is one-KYC-for-all . Think of CKYC like a centralized ID verification system – much like how you have a central Aadhaar number for identity, CKYC is a central reference for your KYC info across financial entities (but note: CKYC is separate from Aadhaar; Aadhaar can be a document in CKYC, but they’re not the same).

In short, FATCA = a compliance step due to U.S. tax law, ensuring disclosure of foreign (Indian) accounts of U.S. persons . CKYC = an Indian centralized KYC repository to make life easier for everyone by avoiding redundant paperwork . When opening an account, FATCA might require you to declare foreign status, and CKYC might involve consenting to your data being stored/accessed centrally. Both sound technical, but as a customer you mostly just fill a form or check a box – the heavy lifting happens behind the scenes (banks reporting data in FATCA’s case, or uploading your docs in CKYC’s case).

Q: Why are banks linking Aadhaar to bank accounts, and what is the purpose of Aadhaar linkage?

A: A: Aadhaar, as you likely know, is India’s unique 12-digit identification number issued to residents, linked to their biometrics. Linking Aadhaar to bank accounts has been a major drive in the past few years. The main reasons for Aadhaar linkage are verification convenience, subsidy direct transfers, and compliance with government initiatives. Let’s break down the purpose and the current status:


• Convenient KYC and Identity Verification: Aadhaar is a quick, digital way to verify one’s identity (thanks to biometric/OTP authentication). By linking Aadhaar to your bank account, it becomes very easy for the bank to verify you using Aadhaar’s e-KYC service (electronic KYC) – for instance, you could open an account online by just providing your Aadhaar number and OTP, without paper documents. It essentially serves as a universal ID. Also, once linked, services like the Aadhaar Enabled Payment System (more on that later) can be used on your account.

• Government Subsidy Direct Benefit Transfers (DBT): One big reason Aadhaar linkage was pushed is to ensure government subsidies (like LPG gas subsidy, MGNREGA wages, scholarship funds, pensions etc.) go directly into the beneficiary’s bank account with minimal leakage. The government uses Aadhaar to identify beneficiaries uniquely. By linking bank accounts to Aadhaar, the government can just say “send X amount to Aadhaar number 1234…789” and NPCI’s mapping will credit it to the bank account that’s linked to that Aadhaar. This has drastically reduced duplicate/fake beneficiaries and ensured money reaches the right person’s account. For example, subsidies for cooking gas cylinders now get credited to the Aadhaar-linked bank account of the customer – this scheme is called PAHAL/DBTL. Similarly, many welfare payments are routed via Aadhaar linkage. It’s efficient: imagine previously having to distribute cash or make people line up – now money just shows up in their account electronically.

• Curbing Multiple Accounts and Fraud: Another intent was to have a unique identifier to de-duplicate accounts. Some people might open multiple accounts under different identities to game systems. Aadhaar seeding (linking) helps banks and regulators see if the same Aadhaar is used across many accounts, thus one individual isn’t able to, say, take multiple benefit of something meant per person. It’s an anti-fraud measure in that sense.
• Ease of Customer Verification and Services: Aadhaar linkage also enables things like Aadhaar-enabled payments (using fingerprint to withdraw money from account via microATM) and retrieving your account info using Aadhaar at a new bank (CKYC and Aadhaar are separate but complementary for ease of use). It’s part of the broader digitization – one ID to link all your financial relationships.

Now, it’s important to mention the legal position: At one point around 2017, the government made it mandatory to link Aadhaar with bank accounts, with a deadline, and threatened that unlinked accounts would be frozen. However, this was challenged in court. In 2018, the Supreme Court of India ruled that Aadhaar is not mandatory for opening or maintaining bank accounts for most purposes . They struck down the requirement that forced linking for private services like banking and telecom. So as of now, you cannot be forced to link Aadhaar to your bank account if you don’t want to . Banks can’t deny you an account or service for not having Aadhaar (except if you’re availing a government subsidy). However, linking is still voluntarily encouraged and in some cases practically needed. For example, if you want an LPG subsidy or certain government payments, you must have your account linked because that’s the only way to get those funds (the LPG subsidy scheme specifically requires Aadhaar linkage). For general banking, you can use other KYC documents if you prefer not to link Aadhaar.

Many people still link Aadhaar to accounts for convenience. The process is simple – you give consent and either submit a photocopy of Aadhaar or do it online (some banks allow you to input your Aadhaar on internet banking, then the bank verifies it with UIDAI). Once linked, your Aadhaar number gets seeded in the bank’s system. You might have heard of the term “Aadhaar seeding” or “AADHAAR seeding status” – it means Aadhaar is mapped to your account in NPCI’s mapper. This also enables things like the Aadhaar Enabled Payment System we’ll discuss later.

In summary, Aadhaar-bank linkage was initiated for efficient government benefit transfer and to leverage Aadhaar as a secure ID for banking. It indeed helped eliminate a lot of ghost beneficiary accounts in subsidy schemes and made life easier for many in getting their money without middlemen. Just keep in mind that it’s not compulsory for general banking after court rulings, but it remains highly useful. One analogy: linking Aadhaar to your bank is like linking your mobile number to your online accounts for OTP – not absolutely mandatory, but if you do, it provides a seamless verification and functionality across services.