If RBI has its way, you can soon opt for bank account portability

Portability will allow a customer to transfer his account to another bank.

S S Mundra, Deputy Governor, RBI on Tuesday said that inter-bank account portability will result in customers silently moving away from one bank to the other and advised banks to prepare for this eventuality. 

He said that digital banking will play a huge role in enabling bank accounts to be ported with the same ease as mobile numbers. Mundra added that NPCI’s extensive efforts and development of apps like Bhim, IMPS and UPI among others have brought this abstract concept into the realm of reality. He also called upon the Indian Bank Association (IBA) to take adequate measures to facilitate bank account portability.  

The RBI in a 2012 notification asked banks to allow intra-bank account portability in cases where KYC has been ascertained. However, analysts say that inter- bank portability of bank account numbers will cause a huge disruption, leading to fierce competition in the banking industry.

Bank account portability can be enabled by linking bank accounts to Aadhaar, which is considered to be a pillar in India’s digital infrastructure. Sunmesh Joshi, Assistant Director General, Unique Identification Authority of India(UIAI) termed Aadhaar as the ‘permanent financial address’  which will enable citizens to move from one bank to another.

Financial Conduct Authority(FCA), a financial regulatory body in UK, issued a report in 2015 on models for implementation of account number portability.  Following this report, a number of countries considered allowing inter bank portability. However, there has been no development till date, due to the hesitance of banks as well as excessive projected costs of implementation.  However, back home, Aadhaar being promoted as the central identifier repository and National Payments Corporation of India(NPCI) as the central payments system indicate that inter bank portability is feasible.