Unhappy with your bank’s services and want to switch to another bank while retaining your account number?

Bank account number portability, as it is called, may still be some time away, with technology and the sheer number of bank accounts in the country seen as the biggest obstacle.

The debate, which was started by former Reserve Bank of India Deputy Governor SS Mundra, has now been rekindled by the All India Bank Employees Association.

In a letter to RBI Governor Urjit Patel, the association has called for bank account number portability as “an antidote to several restrictive practices” by banks.

“Banks are not customer-friendly to small account-holders and have put in restrictions on minimum account balance and have a plethora of service charges. Often they don’t even pass on concessions to customers,” said CH Venkatachalam, General Secretary, AIBEA, adding that there is sufficient technology for bank account number portability.

“This is the logical next step after digital banking,” he told BusinessLine.

Earlier in May 2017, Mundra had also similarly asked banks to look into bank account number portability as it would improve customer service by enhancing competition.

While the RBI had in 2012 allowed intra-bank portability allowing customers to shift their bank accounts to another branch of the same bank without undergoing the full know-your-customer process, it has remained silent on the issue of inter-bank portability.

A costly affair

Bankers say that while it will be a very useful facility for consumers, it could be a costly exercise.

“While this is an extremely positive consumer-centric move, there could be some challenges in implementation with regard to technological readiness of the banks,” said Rajan Pental, Group President and Head of Branch and Retail Banking at YES Bank, adding that from a technical perspective, it will require customers to have a unique identification and regulatory changes allowing banks to rely on KYC done by the other bank with recourse.

“The regulator and banking industry will need to resolve issues such as the new bank honouring existing standing instructions, EMI and ECS mandates, honouring cheques issued or given as PDC and portability with or without history,” he further said while welcoming such a move.

Core Banking System

“The account numbers and banking codes of most banks are different. These will have to be streamlined in some way for customers to switch between banks while retaining their account numbers,” pointed out another banker, adding that even the Core Banking Systemof banks will have to be aligned.

Additionally, the sheer number of bank accounts in the country, which Venkatachalam pegs at over 80 crore, could pose a problem.

“The numbers are too large and every bank will have to have a dedicated team for account portability. Further, with concerns of money laundering and tax evasion, there will still have to be some scrutiny,” noted another executive with a public sector bank.

He also pointed out that the lack of financial literacy, especially in rural areas could pose a challenge, where customers could become a target of mis-selling.

However, experts say that with the use of Aadhaar and the National Payments Corporation of India (NPCI), bank account number portability is quite possible, though, perhaps, in a gradual manner.

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