Bank account portability can be built on Aadhaar

Mumbai: After mobile protability, it’s time for bank account portability where customers can switch banks without having to worry about losing direct credits or missing out on payments being made against standing instructions. The RBI has said that linking bank accounts to Aadhaar will facilitate account portability.
The move to have portability is seen as a medium-term objective by the central bank which should take a few years.“When there is realistion among people and they start linking their bank accounts to Aadhaar this will become possible. This is the direction for the future,” RBI deputy governor S S Mundra said on Wednesday. Until now bank accounts were considered the stickiest of all financial relationships because of standing instruction on payments of bills, loan installments and for regular credits of interest, dividend and salaries. If the account number portability is introduced, all the standing instruction with respect to both debit and credit will move with the account number to the new bank.
Today there are multiple numbers to identify a specific account. These include the IFSC code and the bank account number. In future a payer can send money without knowing this multiple idenfiers. This can be made possible with the Aadhaar payments bridge system (APBS) developed by the Unique Idenfitifaction Authority of India and National Payments Corporation of India. The APBS can route transactions to an individual based on his Aadhaar number if the bank details are linked to Aadhaar. Even today the government makes payments of subsidies and other benefits under the direct benefit transfer (DBT) scheme without account details of the beneficiary using the APBS.
Mundra has been pushing for bank account portability. In February, Mundra drew parallels with the telecom sector and said that India should be a global pioneer in facilitating bank account portability. Mundra had said this would need a ‘shared’ payment system, regulated independently, where all account number and payment instructions are warehoused (such as standing instructions/direct debit etc.), a unique customer ID and a central payment system. Credits/debits would be linked to the unique ID.
In 2012, the RBI had asked banks to provide account portability within a bank. It directed banks to allow customers to access the same account irrespective of where they moved. A year later, a panel which looked into the possibility of facilitating account number portability through a unique number for each customer across the country. The panel had recommended a 26-character international bank account number to facilitate transactions based on a single input, but concluded that portability was not immediately possible.