The RBI circular DOR.SOG (LEG).REC/64/09.08.024/2023-24 (dated January 1, 2024) outlines guidelines for banks to manage inoperative accounts and unclaimed deposits. It requires banks to annually review accounts with no customer-induced transactions for over a year, segregate accounts linked to scholarships or Direct Benefit Transfer (DBT)/Electronic Benefit Transfer (EBT) for uninterrupted credit under government schemes, and take measures to trace customers of such accounts. Banks must also display activation procedures on their websites and branches, and conduct public awareness and financial literacy campaigns.
The Department of Supervision noted a high number of inoperative accounts and unclaimed deposits in banks relative to their total deposits. This issue is attributed to prolonged inactivity and pending KYC updates. Customers often face inconveniences during account activation, including errors in personal details like name mismatches. Some banks also have a significant backlog of accounts pending periodic KYC updation, leading to frozen accounts under internal policies.
To address these challenges, banks are advised to take urgent steps to reduce the number of inoperative or frozen accounts and simplify activation processes. Measures include enabling seamless KYC updates through mobile/internet banking, non-home branches, and Video Customer Identification Processes (V-CIP). Banks must ensure uninterrupted DBT/EBT credits even in inactive accounts and adopt an empathetic approach when handling accounts of underprivileged customers. Special campaigns should be organized to activate frozen accounts, and branches providing Aadhaar-related services must facilitate Aadhaar updates for customers.
Progress in reducing inoperative/frozen accounts must be regularly monitored by the Customer Service Committee (CSC) of the Board. Banks are required to report quarterly updates to the Senior Supervisory Manager (SSM) via the DAKSH portal, starting from the quarter ending December 31, 2024. Additionally, the circular mandates that a copy of the guidelines be presented to the CSC in the next meeting, along with an action plan for ensuring full compliance.
These steps aim to enhance customer convenience, improve operational efficiency, and support financial inclusion while minimizing inconveniences for beneficiaries of government schemes. Proactive oversight by State-Level Bankers’ Committees (SLBCs) is crucial to monitor progress and address issues promptly.
