The Reserve Bank of India (RBI) is contemplating to introduce bank account number portability. The facility would enable the customers to seamlessly switch accounts from one bank to another without changing the account numbers.
RBI Deputy Governor SS Mundra on Tuesday said bank account portability has come “within the realms of possibility” with the technological advancements.
“With technological advancements in the field of payment system such as UPI (unified payments interface) etc. coupled with massive enrolments under Aadhaar and their linkage to individual bank accounts, time has come for bank account number portability,” Mudra said at an event organised by the Banking Codes and Standards Board of India.
The RBI Deputy Governor has urged the Indian Banks’ Association to start working towards this innovative idea soon. “This is better if it comes with combined efforts of the stakeholders rather than a regulatory prescription. I think Indian Banks’ Association should take a note of it and start working towards it,” Mudra said.
It was Mundra who floated the idea of bank account number portability in the past also. In 2015, Financial Conduct Authority (FCA) – an UK-based financial watchdog – for the first time had argued for the implementation of bank account number portability.
Currently, bank account number portability doesn’t exist anywhere in the world. And if the plan is successfully introduced, India will be the first country in the world to adopt such a system.
At a time when technological advancements continue to change the world, the banks have to reinvent themselves to maintain their relevance in the world of finance.
It could be noted that in 2012, the RBI had made it mandatory for banks to allow intra-bank account portability. In 2011, Mobile Number Portability was introduced in India which enables telecom subscriber to change telecom operators without losing the mobile number in use. Following the introduction of mobile Mobile Number Portability, there is cut throat competition in the telecom space.
Insurance Regulatory and Development Authority of India (IRDAI) is considering allowing life insurance policy holders to switch from one insurer to another without surrendering their existing policies.
If mobile numbers can be ported, why not bank accounts? This is not to dispute that bank account number portability will bring a major disruption in the banking space. Once that becomes a reality, the competition in the banking space will reach a whole new dimension.