A Reserve Bank of India (RBI) panel on Wednesday recommended the 26-digit International Bank Account Number (Iban) format be used in Indian banks. A uniform system carrying information about transactions across banks can ensure accuracy and speed. Among others, Iban prevents credit from going to wrong accounts and facilitate straight through processing.
Iban is an international standard for identifying bank accounts across national borders. The format envisages 26 digits — 18-digit bank account number, 4-digit bank code, 2-digit country code and 2 check digits.
The panel, headed Vijay Chugh, chief general manager with RBI, said that both the existing account number and the Iban may co-exist for about three years. Banks can use this time to fully migrate to Iban for all payment and non-payment transactions.
The banks should modify their systems (all delivery channels) to accept both the numbers. Under this system, banks can continue to use the existing account numbers, and where necessary, the number will be padded with zeros to reach 18 digits.
The shift to Iban format will bring standardisation across banks and interoperability in payment systems. However, the simultaneous change across all the banks may also pose systemic risk, RBI panel noted.