Savings bank account portability: A distant dream

http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/ET-Wealth-Savings-bank-account-portability-A-distant-dream/articleshow/11400648.cms

 

After mobile number and health insurance portability, the government now plans to introduce number portability for savings bank accounts. Once it comes into effect, you will be able to move your account from one bank to another without having to change the account number.

 

For unhappy banking customers, this could be a relief as it will save them the trouble of going through the process of opening a new bank account each time they want to switch banks. This will also help you do away with multiple bank accounts. The enhanced competition could lead to better services too.

 

A similar suggestion was also recommended in the Damodaran Committee Report last year. It stated that people who have to relocate often, usually end up opening multiple accounts at different locations. To avoid this, there should be uniform account opening forms.

 

However, taking this step is not going to be an easy task for banks as there are many loopholes that need to be addressed on the technology and data integration front. Adhil Shetty, CEO of Bankbazaar, says, "Banks will have to restructure their account numbering systems. Many of them have different methods and streamlining these will take time. This will also involve changes in their software integration systems."

 

So, banks will need a standard pattern of savings account numbers. The current system differs between banks even in the number of digits that make up the account number. Muralidharan R, chief operating officer of Dhanlaxmi Bank, says, "The first step should be that banks allow number portability for savings accounts within the same banks. There are a few banks, such as Dhanlaxmi Bank and ICICI Bank, which provide this facility. But it's not offered by every bank."

 

Another roadblock will come in the form of know your customer (KYC) procedures. The KYC and the due diligence done vary between banks and may not be accepted uniformly. Experts also believe that there are chances that some people may switch banks too often to escape the net of the Prevention of Money Laundering Act. So, banks need to have a secure KYC norm in place to distinguish the genuine customers from the fraudsters.

 

A report on bank account number portability by Finacle, the banking solutions product of Infosys Technologies, states that this facility is already present in Europe and Australia in different forms. In the United States, every bank account number indicates the bank and pin code of the branch owning the account. However, the mechanism to handle subsequent bank switches is still not in place.

 

Though, the government's step has been taken in the right direction, it is too early to celebrate.

 

With the cost and the roadblocks involved, experts believe that number portability for savings accounts could easily take at least three years to be implemented in the country.