Saving Bank Account Portability

About Saving Bank Account Portability

Finance Ministry and Reserve Bank of India has thought of this new initiative of Saving bank account portability. Once it will come into effect, general public would be able to move their account from one bank to another without changing the account number. A similar suggestion was also recommended last year in the Damodaran Committee Report.

Last year, the Indian Poplualtion got priviledged with Mobile number Portability (MNP) from January 2011 and Health Insurance Portability (HIP) from July 2011 after paying a nominal fee.

Where MNP has empowered telecom subscribers to ditch their erring operators; HIP has allowed customers to switch between, their life and non-life insurance, service providers. Though there are a few banks, such as Dhanlaxmi Bank and ICICI Bank, which have already implemented this policy on narrower grounds; Portability within the same bank.

Saving Bank account Portability has come at an opportunistic time when Reserve Bank of India has deregulated the saving account interest rates (from October 2011), following which few private sector lenders have hiked the rates to as much as 7 per cent, whereas banks such as HDFC Bank and SBI have remained quite.

Positives effects of Bank Account Portability:

This project certainly needs a lot of technical and integration issues to be considered, which requires a lot funds to be injected. For Fiscal 2012-13 the government has made a budget provision of Rs.6,000 crore for Capital Investment in PSU banks. The move would benefit the general public in many ways:

1. Dissatisfied banking customers would get 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.
2. The move would also keep away the public from handling multiple bank accounts.
3. Better services for customers, led by the enhanced competition.
4. People who often relocate will get a sigh of rrelief after this policy come into effect, who usually end up opening multiple accounts at different locations.

Consequeses to be taken care of / Requirements:

However, initiating this task is not going to be a cup of tea for banks as there are many loopholes int he system, that need to be addressed.

1. Many of them have different methods and streamlining these will take time. This will also involve changes in their software integration systems.
2. Banks would have to work on the uniformity of having an identification code, Know Your Customer (KYC) norms and core banking solution (CBS) for implementing this savings bank account number portability policy.
3. Banks will need a uniform pattern of savings account numbers, as the current system of having an account number differs between banks significantly.

Summery / Conclusion:
The policy will certainly save a lot of paper work involved in switching your bank account without much hassels. Lastly, we need a centralised agency that would maintain all our KYC documents, so that we don’t need to comply with submissions with different banks repeatedly.

With the funds and the blockade involved, financial experts hope that savings accounts number portability could easily take at least three to five years to get implemented in India.

Last Updated on 1/11/2012

>> More Banks in India