RBI favours one-time KYC over saving bank account portability

The Reserve Bank of India is of the opinion that more than account number portability, customer would be better served by a facility to shift accounts without having to repeat the "know your customer procedure".

There have been reports that the finance ministry is considering asking banks to look at account number portability. Incidentally, RBI has already looked at the concept and has come to the conclusion that it would be a technological challenge and would be much simpler to implement once every account holder has a number issued by the Unique Identification Authority of India (UIDAI).

"A bank account is a contract between a customer and the bank and it is not easy to transfer this contractual relationship. It can perhaps be looked at once the UIDAI numbers are in place but as of now it is a challenge in terms of technology," K C Chakrabarty, deputy governor, RBI had said in the monetary policy press conference several weeks ago.

Bankers say that unlike mobile phone numbers there is no pressing need for a customer to retain the same account number. "The only reason why a customer would need the same number is because he may have left standing instructions in respect of the account. But with application of one-time KYC norms it should be possible for customers to shift such instructions immediately," said a banker.

Regulators across service industries have been making it easier for unhappy customers to switch service providers. In the mobile industry, number portability has made it possible to switch telecom companies without having to inform all their contacts of the change. In insurance, the regulator has allowed policyholders to move their health insurance contracts to other companies without losing the advantage of no-claim track record. But with banks even after a one-time KYC procedure is introduced customers will have to visit their new bank branch to provide their specimen signature.

In banking, number portability will require that customers be assigned a unique identity number. The government has proposed the UIDAI to be such a unique number. However, in the absence of such a number there is a need for a central registry to assign this unique id to customers.

"This would involve huge investments in technology and make banking services more expensive at a time when the effort is to bring down costs and make banking services affordable to all," said a bank official.