Revised RBI Guidelines on Inoperative Accounts and Unclaimed Deposits

The Reserve Bank of India (RBI) has issued revised guidelines regarding the classification of accounts and deposits as inoperative accounts and unclaimed deposits by banks.

Here’s a breakdown

What Constitutes an Inoperative Account?

  • An account becomes inoperative if there are no ‘customer induced transactions’ for over two years.
  • Customer induced transactions include financial transactions initiated by the account holder, non-financial transactions, or KYC updates.
  • Approximately Rs 1-1.30 lakh crore is estimated to be lying in inoperative bank accounts.

Defining Unclaimed Deposits

  • Balances in savings or current accounts not operated for 10 years or term deposits not claimed within 10 years from maturity are classified as unclaimed deposits.
  • The government reported unclaimed deposits of Rs 42,270 crore as of March 2023.

Revised Guidelines by RBI

  • Banks must conduct an annual review for accounts with no customer induced transactions for over a year.
  • For term deposits, banks need to review accounts if proceeds are not withdrawn after maturity to prevent them from becoming unclaimed.
  • Communication to account holders should be done via letters, emails, or SMS about inactivity and the need for KYC updates.

Classification Criteria for Inoperative Accounts

  • Only customer induced transactions are considered for classifying an account as inoperative.
  • Bank induced transactions such as charges and fees are not included.
  • Accounts opened for government schemes or scholarships should be segregated in the CBS to exempt them from inactivity stipulations.

Reactivation Process

  • KYC updates can reactivate inoperative accounts and unclaimed deposits.
  • Banks must provide KYC updation facilities at all branches and through V-CIP if requested.
  • No charges should be levied for the activation of inoperative accounts.

Penalty and Interest Policies

  • Banks cannot impose penal charges for non-maintenance of minimum balances in inoperative accounts.
  • Interest on savings accounts should be credited regularly regardless of the account’s operational status.

Piyush Shukla

Recent Posts

Keoladeo National Park: Location, Biodiversity, Migratory Birds and Conservation Importance

Following good monsoon rains, migratory birds like storks, pelicans, painted storks, and bar-headed geese have…

21 mins ago

National Forensic Infrastructure Enhancement Scheme (NFIES): Objectives, Components and Latest Updates

With rising crime complexity and new legal mandates requiring forensic evidence, India is strengthening its…

30 mins ago

Fiscal Policy in India: Objectives, Instruments, Types and Role in Governance

Fiscal Policy is one of the most influential pillars of India’s economic strategy. It determines…

44 mins ago

Which is the Coldest Place on the Earth? Check the Name and Significance

The Earth has many amazing and unusual places, and some of them experience temperatures that…

45 mins ago

Billionaire Wealth Transfer Enters Historic Phase

In a striking reflection of a shifting global wealth landscape, the UBS Billionaire Ambitions Report…

50 mins ago

Sunil Narine Makes T20 History With 600‑Wicket Milestone

In a landmark moment for cricket, Sunil Narine has become the first player in the…

50 mins ago