Caught in a Paper Chase: Why PSU Banks Cling to Outdated Account Opening Processes


In an age of instant gratification and digital dominance, a peculiar anomaly persists in India – the cumbersome account opening process at Public Sector Undertaking (PSU) banks. While the government pushes for a cashless economy and champions initiatives like Digital India, these banks remain tethered to a labyrinthine system of paper forms, frustrating customers and hindering financial inclusion.

Opening a bank account at a PSU bank can be an exercise in patience. Prospective customers are often met with a mountain of paperwork – application forms, KYC (Know Your Customer) documents, residence proofs, and a seemingly endless list of supporting documents. The process can be time-consuming, requiring multiple visits

This insistence on physical documentation appears even more baffling considering the existence of the Central KYC (CKYC) registry. CKYC is a national repository of KYC information, allowing for seamless verification across banks. In theory, a customer’s KYC details, once submitted to one bank, should be accessible to all others. However, PSU banks often disregard CKYC, mandating a fresh set of documents, rendering the entire system redundant.

The inertia towards digital solutions is another cause for concern. While private banks and fintech companies have embraced online account opening processes, PSU banks lag behind. These outdated systems not only create inconvenience but also deter potential customers, particularly the younger generation accustomed to a digital world.

The ramifications of this antiquated approach extend beyond customer inconvenience. It hinders financial inclusion, a key government objective. Millions remain unbanked, especially in rural areas, due to the perceived difficulty and time commitment involved in opening bank accounts. A streamlined digital process could bridge this gap and empower these communities by bringing them into the formal financial system.
Security Concerns: A Flawed Argument
Some may argue that paper-based systems offer greater security. However, advancements in digital security, coupled with robust KYC verification processes, can effectively address these concerns. Additionally, online account opening often involves multi-factor authentication and other security measures, making them no less secure than traditional methods.

The time has come for PSU banks to shed their paper-based shackles and embrace the digital age. Here’s a roadmap for a more efficient and inclusive banking system:
* Leveraging CKYC: PSU banks should fully utilize the CKYC platform, eliminating the need for duplicate KYC verification.
* Investing in Digital Infrastructure: Modernizing technology infrastructure to support online account opening and digital verification processes is crucial.
* Customer-Centric Approach: Simplifying forms, offering clear instructions, and providing customer support throughout the online application process are essential for a seamless experience.
* Building Trust in Digital Security: Educating customers about the security measures implemented in online banking systems can address concerns and encourage adoption.
A Modern Banking Landscape for a Modern India
The Indian economy is undergoing a significant transformation, driven by digitization and financial inclusion initiatives. PSU banks, which hold a dominant position in the banking sector, need to adapt to this changing landscape. By modernizing their account opening processes and embracing digital solutions, they can contribute to a more inclusive and efficient financial system, empowering citizens and propelling India’s economic growth. The future of banking lies not in mountains of paper, but in the limitless potential of the digital world. It’s time for PSU banks to catch up and rewrite the narrative.


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