Why Ban Multiple Bank Accounts Opening ?

Several Founders, Co-Founders, CXO Bankers, CXO Fintech professional & people who participated in the ePanel discussions:

• Mr. Surendra Jalan, Founder & CEO at OHMY Technologies Private Ltd.
• Mr. Anupam Varghese, Governing Board Member, NITJ Technology Business Incubator
• Mr. Ravi Shankar, Co-founder & CEO, Active Intelligence Pte Ltd.
• Mr. Arun Tanksali, Co-founder & CTO, Nearex
• Mr. Sandeep Todi, Co-Founder & CMO, Remitr
• Mr. Mukesh Bubna, Founder at Monexo FinTech Pvt. Limited
• Mr. Rajiv Rai, Chief Digital Officer at Edelweiss
• Mr. Neeraj Chandra, Head of Operations, Abu Dhabi Commercial Bank
• Mr. Sunil Kulkarni, Joint Managing Director, Oxigen Services (India) Pvt Ltd
• Mr. Kamonasish Aayush Mazumdar, Chief Marketing Officer, MeraEvents
• Mr. Viswadeep Chavali, Vice President, Equitas Small Finance Bank
• Dr. R Bhaskaran, Former Chief Executive Officer, IIBF
• Mr. Rahul Dayal, Senior Vice President & Head-Business Solutions Group Liabilities, cards & BI, RBL Bank
• Mr. Raghu Veer Dendukuri, Product Owner, Intandemly
• Mr. Vikas R Panditrao, Co-Founder, Forum of Industry and Academic Knowledge Sharing (FIAKS)
• Many other CEO/CXO Bankers & Fintech professionals on FIAKS Forum requested to remain anonymous

The Government is considering to ban multiple bank accounts and put a cap on the number of bank accounts an individual can actively hold

This proposed decision triggered discussions amongst FIAKS community and one of the members posed a crucial question, Why is the Government bothered about whether anyone has multiple accounts in the same bank? It is for the bank management to figure out how they want to deal with such customers and whether they allow it or not.

Most of the urban customers have 3 to 5 bank accounts on average, be it in the scope of Salary Account / few Savings Accounts with different banks, in the scope of Savings Account, Fixed Deposits / Freedom Account.

Here are several genuine reasons why you need multiple accounts in the same bank:

• Use one as a savings account and the second as a checking or transactional account
• Using second account linked with your Demat trading account so that your investment activity is separate from your regular banking transactions
• A proprietorship business using one account for business purpose and another for personal
• NRE and NRO account

One of the community members shared his personal experience stating that he did open different bank accounts to test SMS based IMPS when implementing an IMPS based solution in 2016. In subsequent years he then closed few bank accounts and found out that it’s a tough exercise, as taking time out while the closing account is a less possibility when compared to creating a new one while trying to implement a solution. With core banking across all banks now, there is little reason for an individual to have multiple accounts in the same bank, except for business which is exempted from this restriction.

Now here’s why not allowing multiple bank accounts makes sense for a few reasons:

• While from the compliance perspective it prevents potential smurfing and other nefarious activities (like transferring money, withdrawing and then shutting account).
• People open bank accounts to prevent TDS deduction and other tax evasions.
• It is more on restricting the number of bank accounts for individuals who game the system by opening multiple accounts in different or one bank in one city and multiple cities.

Following are some of the important possibilities of why the Government is considering putting a cap on the number of bank accounts, an individual can actively hold:

1. India becoming a Digital Economy:It might be a drive to have bank details on fingertips of the customer, and this can potentially happen when customer uses a Single Bank Account, and when that is linked to different user identifiers, transaction authorization can be done with a Fingerprint/Iris/MPIN etc, rather than needing to choose a bank account first. This increases usage and keeps the user updated with awareness to prevent misuse as much as this retains attention with regular usage.

2. Commoditization of Financial Services: Consolidation of bank accounts, this can be considered Bank Account Number Portability (so Unique 15 Digit Bank Account Number will be the same, irrespective of which bank this customer uses it with), Banks becoming service providers soon with open banking anyway. It is to be noted that this creates healthy competition between financial institutions.

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