Inoperative Accounts /Unclaimed Deposits in Banks- Revised Instructions
The Reserve Bank of India (RBI) has issued revised instructions regarding inoperative accounts and unclaimed deposits in banks. These instructions aim to streamline the existing guidelines and ensure that banks follow a standardized process to manage such accounts and deposits effectively.
Definition and Classification
According to the new guidelines, a savings or current account is deemed inoperative if there have been no customer-induced transactions for over two years. Customer-induced transactions include any financial or non-financial transactions initiated by the account holder or their representative. In contrast, bank-induced transactions, such as charges, fees, and interest payments, do not count towards keeping an account active.
Unclaimed deposits refer to balances in deposit accounts that have not been operated for ten years or more. These funds must be transferred by banks to the Depositor Education and Awareness (DEA) Fund maintained by the RBI. Each unclaimed deposit is assigned a unique Unclaimed Deposit Reference Number (UDRN) to ensure anonymity and security.
Annual Review and Notification
Banks are required to conduct an annual review of accounts with no customer-induced transactions for more than a year. They must inform the account holders through letters, emails, or SMS if there has been no activity in their accounts for the past year, warning that the account will become inoperative if no operations are carried out in the next year. If no response is received or the letters are returned undelivered, the bank must investigate the account holder’s whereabouts or their legal heirs.
Special Provisions for Certain Accounts
Accounts opened for receiving scholarships or Direct Benefit Transfers (DBT) under government schemes are exempt from being classified as inoperative, even if there is no activity for over two years. Banks must exercise due diligence to prevent fraud in such accounts.
Activation and Monitoring
To reactivate an inoperative account, the account holder must update their Know Your Customer (KYC) details. Banks must provide this facility at all branches and through digital channels. Reactivation requires a second level of authorization, and any activity in these accounts must be logged and audited to prevent fraud. Interest on savings accounts must be credited regularly, regardless of the account’s status.
Customer Awareness and Transparency
Banks must host details of unclaimed deposits on their websites, including the account holder’s name, address (without pin code), and UDRN. They should also provide search facilities to help the public locate unclaimed deposits. Additionally, banks are required to conduct public awareness campaigns to educate customers about the process for activating inoperative accounts and claiming unclaimed deposits.
Conclusion
These revised instructions, effective from April 1, 2024, aim to reduce the number of unclaimed deposits in the banking system and ensure that rightful owners can reclaim their funds efficiently. The RBI’s initiative emphasizes transparency, customer awareness, and stringent monitoring to safeguard account holders’ interests.
