India has the world’s second largest unbanked population, and women make up nearly 60% of unbanked adults in India, despite the government’s national mission for financial inclusion—the Pradhan Mantri Jan-Dhan Yojana scheme—that took the percentage of people who have a bank account in India to 80%.
Every three years, the World Bank releases its Global Findex Database on financial inclusion, the most recent of which was published in 2018. This 2017 Global Findex Database reported that India claims a large share of the global unbanked population because of its sheer size, despite having relatively high account ownership. The share of bank accounts that remain inactive in India is the highest in the world, at 48%.
For Indians to actively participate in the banking system, everyone must first have a bank account. Let’s explore how to open a bank account in India.
Requirements to Open a Bank Account
In India, where the government is working toward digitizing the whole banking infrastructure with the help of IndiaStack, the largest open API-based technology in the world, having a bank account has become a necessity to access any financial service or buy a financial product.
To open a bank account in India, an applicant needs to own a list of documents that are outlined by all state-owned and private banks in India as must-haves to meet the Know Your Customer (KYC) requirements.
Here’s a list of what’s required:
Aadhaar Card
The first step is to apply for your Aadhaar card, if you don’t have one already.
IndiaStack’s backbone Aadhaar—a verifiable 12-digit identification number issued by the Unique Identification Authority of India, based on a customer’s biometric and demographic data—has been playing an important role in helping the federal government enable citizens to open bank accounts.
To open a bank account, the Aadhaar card has become the single valid proof of identity, proof of residence and proof of the bank account holder’s phone number.
Locate an Enrolment Center
In order to enrol for Aadhaar for yourself or for your family member, you will be required to visit an Aadhaar Enrolment Center. Locate the nearest center by visiting the Government of India’s Unique Identification Development Authority of India.
Book An Appointment At Unique Identification Development Authority of India’s Aadhaar Seva Kendra
This appointment for Aadhaar enrolment can help you enrol for a fresh Aadhaar card and also help you update your name, address, mobile number, email address, date of birth and biometric information. Any incorrect information can stall your bank account opening process; hence, it is paramount that all information is verified and rechecked before applying for a new bank account.
Check Aadhaar Status
You will need your enrolment ID (EID) to check your Aadhaar status. The EID is displayed on the top of your enrolment/update acknowledgement slip and contains a 14-digit enrolment number and the 14-digit date and time of enrolment. These 28 digits together form your EID.
In case you are unable to recall your EID, you can retrieve a lost or forgotten EID by your registered mobile number.
Download Your Aadhaar
You can download an electronic copy of your Aadhaar card. The e-Aadhaar is a password-protected electronic copy of Aadhaar, which is digitally signed by the UIDAI.
Your enrolment center can also send over a physical copy of your Aadhaar card.
If you would like your Aadhaar reprinted, you can request a reprint by using your Aadhaar Number or enrolment ID.
Once your Aadhaar card is printed and you have all your details correctly in place, you can open your bank account in four simple steps.
Permanent Account Number (PAN)
The Permanent Account Number, or PAN, is a 10-digit unique alphanumeric number issued by the Income Tax Department of India. PAN enables the tax department to identify and link all transactions such as tax payments, returns of income and specified transactions of the PAN holder.
It is mandatory to produce your PAN card at the time of application for a new bank account. Steps to procure a PAN card include:
Apply Via a PAN Application Center
The Income Tax department has allowed UTI Infrastructure Technology and Services Limited (UTIITSL) or the National Securities Depository Limited (NSDL) to manage PAN service centers.
For any person wishing to obtain a PAN, the PAN application form (Form 49A/49AA), along with other related documents and prescribed fees, is needed to be submitted at the PAN application center of UTIITSL or NSDL.
A person who is a citizen of India can apply for a PAN via Form 49A, and a nonresident person, including a foreign company, must apply for a PAN via Form 49AA.
Individual applicants will have to affix two coloured photographs on the application form.
Prescribed documents to establish proof of identity, address and date of birth need to be sent with the filled application form.
Apply Online
You can apply for a PAN card online by visiting the NSDL website. Five simple steps need to be followed:
- Applicants will need to register by submitting Form 49A/49AA procured via the website.
- A token number will be generated for the applicant before filling the form.
- This temporary token number is sent to the applicant’s e-mail ID and helps the applicant fill the application form.
- The details submitted need to be reviewed by the applicant prior to final submission. Once all is checked, the form should be submitted.
- The payment sum is decided depending on whether the applicant wishes to get a physical PAN card or an online version.
While the Aadhaar Card, as well as the PAN card, are mandatory to create a bank account, other documents that can be used include a driving licence, the applicant’s passport, his or her voter’s ID and the ration card, which is issued by the government of India to enable citizens to purchase subsidized food grain via the Public Distribution System.
Steps to Open a Bank Account
Once you have all your documents ready, follow these four steps to open your account:
Visit Bank Branch or Apply Online
To open any type of bank account, you need to visit the bank’s branch or visit the bank’s website to procure the bank account opening form.
This form requires you to fill personal details such as your name, permanent address, date of birth, the names of parents or spouse, along with your signatures to commit to basic terms and conditions of the bank.
Submit Documents of Proof for KYC
Indian banks have been mandated by the central bank Reserve Bank of India to authorise the opening of a bank account only when certain documents are produced as proof of identity.
In the case of opening a new account, customers need to submit mandatory documents such as an Aadhaar Card or PAN Card, and submit two recent photos of themselves. Other documents of proof will vary from one bank to another.
Wait for Bank to Assess Documents
Banks usually take one to two days for new account approvals. Once you’ve submitted your documents, wait for the bank to reach out to you for verification or clarifications on any errors they see in your KYC document submissions.
Collect Your Account Details, Debit Card and Internet Banking Details
Once the bank approves your account-opening documents by analyzing the proofs submitted, new account opening is sanctioned and the bank issues you your bank account number, along with a customer ID to enable online banking. Online banking is a way to carry out banking transactions electronically using the internet, instead of making in-person transactions at a physical bank branch.
You are also provided a debit card to start accessing your bank account and conducting financial transactions. A debit card is a plastic card issued by your bank to enable you to make payments using the card instead of paying in cash.
As a mandatory requirement, you are expected to change your ATM pin by visiting a bank ATM and selecting a new pin for your debit card.
You are also provided a cheque book, which helps you sign cheques to transfer funds from one bank account to another. Cheques are paper documents that instruct a bank to carry out a fund transfer from one account to another on whose name the cheque is issued.
The country’s journey from being unbanked to taking bold steps to increase banking has been possible only with the collective effort of the government, the corporate sector and of other industry stakeholders.
India can lead the race to nationwide financial inclusion only when its citizens decide to empower themselves. Having a bank account will prove as the first step in achieving that goal.
