RBI issues Circular on Inoperative Accounts/Unclaimed Deposits in banks
Banks are required to conduct an annual review of accounts that have seen no customer-initiated transactions for over a year
RBI – Circular – Inoperative Accounts-Unclaimed Deposits – banks – TAXSCAN
RBI – Circular – Inoperative Accounts-Unclaimed Deposits – banks – TAXSCAN
The Reserve Bank of India ( RBI ) has issued a circular instructing commercial banks, excluding Regional Rural Banks, to take immediate measures to address the rising number of inoperative accounts and unclaimed deposits. The advisory follows an analysis by the Department of Supervision, which revealed a significant proportion of inoperative accounts vis-à-vis total deposits in several banks.
Banks are required to conduct an annual review of accounts that have seen no customer-initiated transactions for over a year. This includes accounts opened under government schemes such as scholarships or Direct Benefit Transfers ( DBTs ) that may have become inoperative.
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Banks must ease out the reactivation process of inoperative accounts. This includes enabling seamless Know Your Customer ( KYC ) updates via mobile banking, internet banking, non-home branches, and Video Customer Identification Processes.
The RBI added that many accounts tied to DBT/EBT schemes remain frozen due to pending KYC updates, causing inconvenience to underprivileged beneficiaries. Banks have been directed to adopt an empathetic approach and ensure uninterrupted access to such accounts.
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Banks are instructed to organize special drives and public awareness campaigns to facilitate the reactivation of frozen accounts. Additionally, they must promote financial literacy and display clear instructions for account activation on their websites and at branch offices.
Banks are required to report their progress in reducing inoperative accounts quarterly via the DAKSH portal, starting from December 31, 2024. The Customer Service Committee ( CSC ) of each bank’s board will oversee progress and ensure compliance with the directives. Banks must present a monitorable action plan to the CSC in their next meeting.
The RBI guidelines were issued after reports of customers facing issues such as name mismatches or procedural delays when attempting to activate dormant accounts. The regulator urged that banks should make the process hassle-free and minimize inconvenience to their customers.
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