Banking on Freedom

     Print Edition: June 2012

Did you recently move from one city to another? Now, you can get your bank account transferred to a nearby branch in the new city while retaining your account number.

The Reserve Bank of India (RBI) has asked banks to allow portability of accounts among their branches if the customer has fulfilled complete KYC (know your customer) details. The facility would provide customers the flexibility to move their accounts to desired branches without much paperwork.

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"The customer should be allowed to transfer his account from one branch to another branch without restrictions. In order to comply with KYC requirements of correct address of the person, fresh address proof may be obtained from him/her upon such transfer by the transferee branch," the RBI said in its notification.

Some banks were insisting on opening of fresh accounts by customers when approached for transfer from one branch of the bank to another.

"Such insistence on opening of fresh account or making the customer undergo full KYC process again causes inconvenience to them, resulting in poor customer service. It is not reasonable in view of the fact that most bank branches are now on CBS (core banking solution) and KYC records of a particular customer can be accessed by any branch of the bank," the RBI notification said.

In another consumer-friendly step, the central bank has asked banks to fix service charges for outstation cheques or speed-clearing of instruments valued above Rs 1 lakh on a cost-plus basis.

In January 2011, banks were given the freedom to fix collection charges for cheques valued above Rs 1 lakh cleared through speed-clearing and outstation cheque clearing mechanism. Subsequently, some banks fixed the charges as a percentage of the value of the instrument instead of the cost incurred in its clearance.

"Instances of banks levying charges as an arbitrary percentage to the value of the instrument...have been brought to our notice. Such practices are in violation of instructions issued under Section 18 of the Payment and Settlement Systems Act 2007," the RBI said.

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