Your existing bank account will look this:
IN68 0027 4324 5672 4672 1968 72
|Account Sequence Number
|4324 5672 4672 1968 72
Readers might recall that a reference was made to constitute a “Technical Committee constituted to examine uniform routing code and account number structure” in Second Quarter Review of Monetary Policy 2012-13 on October 30, 2012, (para 122).
The Committee was since formed and was required to submit its report by end-December 2012. The report has now been submitted and Reserve Bank of India, has invited comments by various stakeholders by 15/02/2012.
The comments are invited by email to email@example.com.
The basic objective of the committee:
a) To look into the feasibility of doing away with branch identifier in Indian Financial System Code (IFSC);
b) Desirability of implementing International Bank Account Number (IBAN) replacing multiple identifiers for all financial transactions;
c) Harmonisation of different types of bank/branch codes (IFSC / Basic Statistical Returns (BSR) Code / Magnetic Ink Character Recognition (MICR) Code / Society for Worldwide Interbank Financial Telecommunication (SWIFT) Business Identifier Code (BIC) etc.).
The Committee has made recommendations that have significant effect on the working of banks, payment systems and customers’ interface with the banks.
The key advantage sought to be built is the requirement from the remitter of just one parameter (account number, albeit a long one, of the beneficiary) and the ability of various payment systems to ensure correct delivery or rejection, if incorrect, of a payment instruction across the banking system at source itself.
Recommendations of the committee in Brief:
01) IFSC to continue: All new Payment Systems to have the IFSC as the primary routing identifier.
02) Long IBAN model to be adapted to India: The composition of the Longest IBAN is as under.
Each account number will be 26 digits long. 18 digit account number, 4 digit bank code, 2 digit country code and 2 check digits. The main advantage of this system is that banks can continue to use the existing account numbers, and where necessary the number will be padded with zeros to make the length of 18 digits as required.
03) Both the account numbers (existing number as well as the IBAN) may co-exist for about 3 years, during which period banks will make the necessary arrangements to fully migrate to IBAN for all payment and non-payment transactions, and domestic as well as international transactions. The banks will be required to modify their systems (all delivery channels) to accept both the numbers till such time.
What is IBAN?
IBAN is an international standard for identifying bank accounts across national borders. It was originally adopted by the European Committee for Banking Standards, and was later adopted as an international standard under ISO 13616.
IBAN’s primary purpose is to:
– facilitate domestic/cross-border inter-bank electronic payment
– avoid routing errors in domestic/cross-border payments
– facilitate straight through processing
Instead of reinventing the wheel, IBAN structure has been suggested, as this is being used across the world by the banks.
Format of IBAN
IBAN mainly consists of two parts – first part consists of country code (2 characters) check digit (2 numeric) bank ID (4 characters) and second part consists of BBAN which can be decided by banks (max up to 26 characters). Thus, IBAN can be of maximum 34 digits with BBAN up to a maximum 26 characters long. However, the length of Basic Bank account Number (BBAN) and IBAN should be uniform across the banks in the country.
The views of the Banks across India were obtained on the challenges of migrating to 26 digit IBAN. The main point common across was that Finacle solution (version 7.x) ( used by many banks in India) does not support the IBAN, but Finacle 10.x version. Finacle 10.x version is already in Production and is live in Axis Bank. So, migration to IBAN, in the respective Banks CBS would not be a major challenge.
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