RBI, as a measure to assist the account holders and with a view to consolidating and rationalizing the extant instructions on inoperative accounts, a review was carried out in consultation with all stakeholders. Based on the review, it has been decided to issue following comprehensive guidelines on the measures to be put in place by the banks covering various aspects of classifying accounts and deposits as inoperative accounts and unclaimed deposits, as the case may be, periodic review of such accounts and deposits, measures to prevent fraud in such accounts/deposits, grievance redressal mechanism for expeditious resolution of complaints, steps to be taken for tracing the customers of inoperative accounts/ unclaimed deposits including their nominees/ legal heirs for re-activation of accounts, settlement of claims or closure and the process to be followed by them.
1 Annual Review of Dormant Accounts
Banks are required to conduct at least an annual review of accounts that have been dormant for over a year. This is crucial to prevent deposits from becoming unclaimed. Banks must proactively reach out to customers via written notices, emails, or SMS alerts, informing them of the inactivity. These alerts also serve as a reminder that accounts will become inoperative without activity over the next year, necessitating KYC documentation for reactivation.
2. Diligent Enquiry for Unresponsive Customers
If attempts to contact the account holder are unsuccessful, banks must immediately initiate an enquiry to locate the account holder or their legal heirs, especially in cases of deceased account holders. This proactive approach ensures that customers or their beneficiaries are not deprived of their funds.
3. Extended Operative Period
Upon receiving a response from an account holder explaining the inactivity, banks will extend the operative status of the account by another year. However, failure to operate the account within this extended period will lead to its classification as inoperative.
4. Customer-Induced Transactions
For an account to remain active, only customer-induced transactions are considered. This includes mandates such as standing instructions or auto-renewals in savings, current accounts, or term deposits.
5. Individual Account Assessment
Each account or deposit is assessed individually, even if a customer holds multiple accounts. This method ensures a precise and fair evaluation of each account’s status.
6. Accounts Linked to Government Schemes
Accounts opened for government-related direct benefits or scholarships are treated differently. These accounts, often zero-balance, are not classified as inoperative due to non-operation, acknowledging their specific purpose and the government’s difficulty in processing transactions in inoperative accounts.
7. Segregation and Audit of Inoperative Accounts
Inoperative accounts are segregated to reduce fraud risks. These accounts, especially when reactivated, are subject to rigorous monitoring and concurrent audit, ensuring the highest levels of scrutiny and safety.
8. Tracing Account Holders
Banks undertake various measures to trace account holders of inoperative accounts, including contacting the account introducers or registered nominees. Special drives are periodically conducted to locate customers or their legal heirs.
9. Activation and KYC Compliance
Inoperative accounts can be reactivated upon updating KYC, which can be done through various channels, including video-Customer Identification Process (V-CIP). This ensures the adherence to stringent KYC norms and prevents unauthorized access.
10. Interest and Charges
Importantly, interest on savings accounts continues to accrue regardless of the operational status. Moreover, banks are prohibited from levying charges for inoperative account activation or penal charges for non-maintenance of minimum balances.
11. Public Awareness and Fraud Prevention
Banks play a critical role in educating the public about these procedures and ensuring robust fraud risk management. Information is readily available on bank websites and branches, along with necessary claim forms and documents.
