Jagoinvestor
January 12, 2012
Saving Account number Portability – Is it Needed ?
Saving account numbers will soon be portable in India. Finance ministry is working on this from some time and soon you will be able to change your banks without changing your Bank account number. Saving account number portability will be almost similar to porting your mobile number to different network carrier.
Why people don’t change banks?
A lot of people do not change their banks because there is a lot of headache involved in the procedures. If you change your Bank from ICICI to HDFC, it means you have to change the account numbers at different places (for ex SIP ECS). Also you will have to close the ICICI account
and open a new account in HDFC which means repeating the procedure all over again. These tasks stop people from taking action of moving from one bank to another. However with saving account number portability, you will be able to change your Bank account from bank A to bank B with less paper-work. The procedure is expected to be small as the KYC norms will also be taken care and no there will be no change in the Account Number.
Recently, with the Savings bank rates deregulation and NRE/NRO deposits deregulation has resulted in many banks increasing their saving bank interest rate to 6-7% (example YES BANK and KOTAK bank) and a lot of banks increased their NRE/NRO deposits rates from 3-3.5% to 8-9%, however a lot of people have not considered to change their banks just because of the WORK involved in the opening of new bank account. If saving account number becomes portable then a lot of people might have considered doing this.
Implementation of Saving account portability is a big task!
However this idea looks great to a lot of people, the whole idea of portability is not that easy and there are several challenges in this process. Those are
Renumbering the 500 million bank accounts – There is approx 500 million saving bank accounts in India and these account numbers are 12, 13 or 14 digits account numbers in most of the cases where the first few numbers are for branch code . Now the first task before portability is achieved is that all these account numbers will have to be renumbered and there has to be same format for these. So that your account number after changing the bank is still same. Now how will this be achieved? How much realistic this is and how investors will be able to accommodate this part in their banking life.
Different banks having their own KYC rules – At the time of opening a saving bank account with a bank, it has its own procedure and documentation and they feel that they do the best job in that. When portability comes into picture, there has to be same kind of KYC norms with all the banks and they should feel confident about it, as they would not like to rely upon others KYC. This part would be rather challenging.
Do you feel you need this saving account number portability or is it a stupid idea ?
Hi Manish,
i think RBI should issue account Nos. pattern should me on state-district-taluka-PIN-bank code/ branch code, and banks require to follow the same, in that case TDS also need to consider,
That would be great wish , but the legacy account numbers are there, how do you make such a big change in system >?
Its a good idea, it should have been like mobile phone numbers. 🙂
Yea
GREAT JOB BANK AC NO PORTIBLITY BUT HAVE UNIQUE BANK AC NUMBER BY RBI FOR ALL INDIAN BANKS
GREAT JOB I WANT BANK AC NUMBER PORTIBLITY FOR MY ALL MUTUAL FUND AND ITS SIP ,ECS, AND ALL INVESTMENT . FOR ALL INVESTMENT IT IS VERY GOOD. SOME BANK DONT GIVE GOOD FACILITY THEN WE CAN CHANGE THE BANK WITH SAME AC NO. . BECAUSE OF IT BANKS IMPROVE THERE SERVICE. TO KEEP THERE CUSTOMER. IT IS ALSO GOOD FOR NON MAINTAIN AVERAGE MONTHLY/QUATERLY BALANCE SOME BANK AXIS,ICICI,HDFC 10000 AND SBI 0 BALANCE
That is comforting to know. Thank you.
Manish, I read about this account number portability in The Economic Times some days ago. Thanks for reminding me. I think it should be quite easily done with modern technology currently available. But the numbers can not continue to be bank specific or branch specific etc. They will have to become purely person specific. But if the same number has been issued to more than one person by different banks in different parts of the country, then there can be a problem if two or more people with the same number decide to transfer their accounts to the same branch of the same bank. This possibility arises only if some banks at some stage have issued account numbers that are not branch and or bank specific.
Regards.
KM Manohar
from the start of the banking industry , the account numbers had branch code . so this issue will not arise
Manish
What will be beneft of portablity. all ECS, would again require updates, all finacial transaciton would require update because bank code would change.
Rahul
but wont that be a one time thing ?
I have read all comments and Manish’s replies. I think, there are three classes of people who have responded. One-just negative minded, skeptical, avoid, nothing new required. Two- positive minded, well coming new ideas, and prepared to face difficulties, problems in implementation. Third- just not sure whether to welcome or say,NO? They are always in dilemma.
I think portability is call of time in globalization of all kinds of worldliness. So, let us be with time and welcome. Remember, Railway Engine and train when introduced, passengers were afraid and thought it to be monster and now!
Very true … Different kind of people and different reactions 🙂
Manish
I think this is possible, bcoz whatever the A/C no may be 12 to 14 digit, but those are external nos, MICR centers works only on six digit RBI a/c nos,saparated by 3 digit Area code+ 3 digit Bank Code+Branch Code, these is called internal a/c no. Hence by keeping the (12 to 14) External A/c no unchanged. a perticular A/C can be made portable.
Advantages are : Uniformity in the services offred, celing in AQB,Healthy compitition within the banks benefiting consumers.
Hi,
I believe it will just change the nature of issues faced.
In Mutual Funds KYC itself, it took me 3 trials to get all details corrected(Once PIN wrong, once number wrong and once name spelling wrong) and I am really worried that next time when I submit for address change in KYC, what else will go wrong. 🙁
Just imagine if MF industry being at minuscule scale in comparision to banking can create so many issues in updation of data, what will happen for our huge banking industry details……..
tc
shobha
Shobha
Yea .. these are the challanges , thats sure .. we can only be clear if these can be dealt once more info comes on this portability thing
Manish
Manish,
Wow, now portability in Savings A/c too, did not hear about, thanks for bringing it up. It’s going to be a big task for all the banks and the Govt. to get this done.
But if they implement then it will be beneficial to the customers.
Rakesh
Rakesh
Different opinions from different people 🙂 . Let see how easy or tough it gets for govt to implement it
Manish
Implemeting this may require doing away with MICR, IFSC codes and all… it would really be great if thats done and interesting will be do see how smooth/painful would be the transition to portability.
Chaitanya
I think these things will still be there as these things will distinguish banks from other banks ..
Manish
HI manish,
I think it is a great Idea [speacialy when your financial situation changes (It will help people maintain minimum SB a/c balance required e.g. SBI 500 or 1000 and ICICI 10000, CItibank even higer, there is a huge difference.) or switching your salary accounts]. As you change you companies and jobs you end up having too many salary accounts and when you quit that job you have to maintain SB a/c norms. This portibility can end this problem by have minimum balances and also create a good Credit history which is possible when you have less accounts [you can manage them well then have 10 to 15 accounts with different SB norms]
Gazala
Yea .. a little bit of that issue will be solved , true ..
Manish
Hi Manish,
It will be very usefull for people who change there city frequently.
Since i was in college i have used around 7-8 savings account. The problem with the nationalised bank is that the acc can not be fully operated from outstation. i opened an account in Gurgaon in SBI and now i am in pune. i canot update phone number, address easily from pune. when my debit card is lost i am asked to go to Gurgaon to collect new card. This is really fully. looks like i am not a customer of a national level bank but a local bank of Gurgaon.
And if i transfer account here the number will get changed and have to be updated at so many places.
So if portability is there i can carry my account to every new city with me. 🙂
Nitin
Yea in a way .. but you can also apply for transfer of account , why didnt you first apply for account transfer to Pune ?
Manish
I do not how much difficult it is to introduce this system, but I will certainly change the bank, because my mutual fund accounts and SIP accounts could not be altered quite easily with the existing procedure.
Parthasarathy
Parthasarathy
What are the issues you are facing ? can you explain ?
Manish
Hi
In my opinion, this is not a good idea and there is no use with this number portability. Just imagine one thing. By having number portability itself, you cant achieve all. For ex, all the ECS options active on the existing account need to be changed/updated (with new Bank details) at all the respective Banks or Insurance Companys or Fund Houses etc. This is only one example.
Even for the Banks, it is very much cumbersome process. You mentioned that the existing account numbers need to be changed to have a common pattern. This involves lot of things. In this scenario lot of things to be addressed. If you compare with the benefits and the efforts needed to have the portability, it is not a great idea.
This is my personal opinion.
Thanks for your efforts and valuable articles. I really like your articles and improved my knowledge/awarenes on several things.
Rajendra
yea .. existing things will have to be changed , but dont you think that other than existing things .. things will get more simple ?
Manish
Manish
I think there is no such requirement for the portability of the sb a/c no., because mostly people have only one s.b. a/c and specially in the villages mainly SBI are operating, in that case there will not be any option for the a/c holder to change there bank.
Also in the cities, only corporates do regular banking otherwise as a individual person they do banking only once or twice in a month.
Thanks
Vishal Mishra
Yes, It is a great Idea.. I fully support it…Thanks to
Finance Minister for that Idea….
Ashoke
So do you really feel it would be easy and practical to implement this idea ?
I would think that disadvantages outweigh the limited benefits (if any).
Who remembers the account number? Its just a number which is not required to be unique. How would a person be benefited if he shifts the account from Bank A to Bank B except that one number is same?
In all his Direct Debits, Policies, Transfers, Salary documents, or whenever you do a transfer – you still have to update the new bank, branch and other details. At teh very minimum your login ID will change.
Unlike the mobile account ‘number’ is rarely used in isolation in any transaction (other than interbank transfers). Not much benefit I would think.
Bank will say “Plase move to our bank – we will charge you as per our policies, fill in new KYCs, issue new cards etc etc but Hey you can have the same account number which you had”
Ashish
Ashish
Hmm.. ok , I agree to that .. But there can be some things which will become one like KYC , else really there is no point in having a single account number
Manish
Indeed.
But a centralized KYC is very very far off destination.
Till then this portability will have little effect if any at all.
This woluld result in more wastage of resources and funds with a very little benefit to be achieved. I am further afraid that banks with huge operations and zillions of financial products linked with each other will recover the cost of this ‘upgrade’ from their customers as new fees.
Ashish
Ashish
hmm .. i guess this topic has a lot of dimensions and too much to argue 🙂 . lets it actually happen and only then we can discuss more
Manish
🙂 As you say. 🙂
At this point it seems like a fad and not a really necessity. Relations like banking are to be seen as a long term association and not as a transactional one. Banking relations at back-end are complex and will lead to a lot of mis selling and confusion especially in a society where financial literacy and understanding of financial documents is low. It might just end up like ulips where understanding of charges and returns of all mixed & messed up. A number portability for vehicle registration might be good though.
Sinduja
Thats a great point that Banking is a long term relationship , not just transactional 🙂 .. That is in favour of Not implementing this saving account portability