India’s new government has promised big moves on poverty reduction. At the center is a plan to provide a new biometric ID card to every one of India’s one-billion plus citizens. To lead it, the government has tapped Nandan Nilekani, cofounder of Infosys, one of India’s biggest computer-services companies.

Part of the concept’s appeal is slashing widespread “leakage” (fraud, corruption, theft) in the government’s already prodigious subsidies intended for the poor. One in ten Rupees spent by the government are aimed at poor households - for example, India’s National Rural Employment Guarantee Scheme paid workfare wages to more than 35 million un-employed people last year.

But more than half of subsidies to the poor gets diverted before it reaches the poor, according to some Indian economists. By adding biometric identification, the government believes the card can cut that down to below 10%, effectively doubling the amount of money reaching the poor (and not coincidentally, effectively paying for the national ID card though these cost savings).

What’s more, a chip-embedded card like the one envisioned has obvious utility for banking services. Account sign-up could become dramatically easier for the poor, who could prove their identity effortlessly merely by pressing their thumb on a reader. Account balance and transaction data can be stored on the chip and forwarded on to bank databases. Perhaps most critically, with one billion card holders, banks would have immediate access to many more potential customers at the bottom of the pyramid. This may be the trigger needed to encourage substantial investment in branchless banking.

Some softening  will also be needed in regulations about who can be an agent, which have also limited the business case up to now. The reserve bank has just signaled it will permit withdrawals via debit card at any one of India’s 400,000 plus point of sale terminals, which looks like an important change.