Reserve Bank of India Deputy Governor S S Mundra has proposed the idea of bank account portability, saying banks must start preparing for the move. He asked banks to work towards account number portability, as it will be a far-reaching step towards enhancing competition and improving customer service.
Bank account number portability allows a banking customer to retain an account number even if she or he switches to another bank.
A similar facility in the telecom sector — Mobile Number Portability — lets subscribers change telecom operators without losing the mobile number in use.
This service will be very useful for migrant workers, as this will allow them to shift their banks simply by writing an application to his home branch.
A lot of people do not change their banks because there is a lot of headache involved in the procedures.
Customers will also be able to take the advantage of ‘Deregulation of interest rates’ easily by switching banks easily with minimum paper work.
However, there are hurdles to it, especially with the IT infrastructure. There is approx 500 million saving bank accounts in India and these account numbers are 12, 13 or 14 digits account numbers in most of the cases where the first few numbers are for branch code . Now the first task before portability is achieved is that all these account numbers will have to be renumbered and there has to be same format for these.
The two key enablers for this in the Indian banking context are Aadhaar as the unique identification for customers and National Payments Corporation of India (NPCI) as a central payment system.
Today there are multiple numbers such as the IFSC code, bank account number, mobile money identifier (MMID) number for IMPS, customer relationship number, etc to identify one specific bank account.
This can be made possible with the Aadhaar payments bridge system (APBS) developed by the Unique Identification Authority of India (UIDAI) and NPCI. The APBS can route transactions to an individual based on his Aadhaar number if the bank details are linked to Aadhaar.
However this idea looks great to a lot of people, the whole idea of portability is not that easy and there are several challenges in this process.
