By Devanshee Dave
In 2012, while scoping for bank account portability, RBI issued derivatives to all banks for intra-bank account transfer but it contained fear of increasing competition among banks which could create huge obstructions. Now India has developed vast technology and is able to manage the reform. The awareness of Aadhaar enrolments as Unique Identification and its linkage to bank accounts, along with the payment system like Unified Payments Interface (UPI) has transformed the mirage into a reality.
Bank account number portability
Earlier this week at the annual conference of Banking Ombudsman, RBI Deputy Governor, SS Mundra talked about Bank Account Portability—“Banks should look forward to provide more choices to the new generation of customers who are more technology savvy.” According to him, just like the portability of mobile numbers, digital banking will be a foster for porting bank accounts, customers will silently move from one bank to another and the banks have to be prepared to accommodate them.
In addition to that, Mr Mundra added that in 2012, he presented the idea of bank account portability but it was abrupt due to lack of technological interface. But now, applications like BHIM (Bharat Interface for Money App), IMPS (Immediate Payment Service) and UPI have made the concept more possible. He has urged banks to start working towards it. This new concept will definitely increase competition but from the point of view of the customer, it will also improve the customer service.
A Boon to Customers
Bank account number portability allows customers to change the bank operator just like changing a mobile operator, but the number of the bank account would remain the same. This can be done without suffering any kind of transaction loss from debit or credit cards. It will benefit the customers as they would have options open for changing their banks, however, full KYC registration with the bank is a prerequisite for that.
Referring to the principle of the Charter of ‘Customer Rights’, Mr Mundra has also asked IBA (Indian Banks Association) to work on the path of creating a common platform, to provide transparency of different customer products and services.
In the past, many nations have thought of adopting the concept of bank account portability. In March 2015, United Kingdom’s Financial Conduct Authority showcased a report citing the benefits of portability of bank accounts. In the same way, CIFR (Center for International Finance and Regulation), Australia, released a report focussing on the competition in retail banking and its advantages to customers, but it was rejected on the basis of being impractical and expensive to implement.
In the last few years, India has built itself to implement this huge change in the most sensitive sector of the country- the banking sector. If India succeeds at this, it will become the first country ever to adopt this concept. The risk is higher but it also contains the power to change the way we perform banking functions.
Featured Image Source: Visual Hunt
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