RBI Plans to Launch Bank Account Portability through its Payments Vision 2028 Initiative

As part of the RBI’s Payments Vision 2028, the Reserve Bank of India is planning to introduce a new Payments Switching Service (PaSS), which will enable users to change their service provider without changing their account numbers. 

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

The RBI is planning to launch this new service to help users who face difficulties while changing banks, especially while changing multiple linked financial transactions such as salary, loans, mutual funds, and insurance.

Centralised System To Enable Seamless Switching

According to the RBI’s Payments Vision 2028 document, the proposed PaSS framework will introduce a centralised switching layer to manage payment instructions linked to bank accounts.

Under this system, customers will be able to view all active payment mandates associated with their account in a single interface. These mandates can then be migrated to another bank account through an authorised process.

According to RBI, the objective is to enable the transfer of payment instructions with minimum disruptions, thereby allowing customers to switch banks without having to update their standing instructions.

The system will be able to support both full and partial migration of payment instructions, depending upon user needs.

Addressing Existing Banking Constraints

At present, when an individual wishes to switch bank accounts, they have to manually modify several standing instructions with financial services. This will include changes to automated payments and receipts, which may lead to delays, non-payment, or even incurring penalties.

In this regard, the RBI found that the operational complexities involved in modifying bank accounts make it difficult for individuals to switch accounts. This limits the number of individuals willing to switch accounts.

In an effort to address this issue, the RBI is introducing the concept of account portability.
Implementation Under Evaluation

The RBI has not made an announcement on the rollout of the Payments Switching Service. The central bank has indicated that it will examine the feasibility of the framework before implementation.

According to the Payments Vision 2028 document, the rollout would require integration across banks and payment systems, standardisation of mandate formats, and the establishment of secure consent-based mechanisms.

The framework will be implemented in phases, depending on the system readiness and regulatory requirements.

Part Of Broader Payments Reform

The portability of accounts is part of the larger set of proposals under the Payments Vision 2028. The other proposals include the improvement of cross-border payment systems, the improvement of digital payment controls, and the improvement of data infrastructure, among other aspects.

The RBI has also outlined its efforts towards the implementation of mechanisms that will enhance fraud risk management and the concept of collective accountability among financial institutions.

It is worth noting that the country accounts for a significant percentage of global real-time digital payments, as indicated by RBI data, and the proposed system is expected to further enhance the ease of use within the banking system.

The introduction of the concept of portability is expected to enhance the efficiency of operations in the retail banking system while ensuring that payment systems are responsive to changing requirements.