The Reserve Bank of India (RBI) issued a circular on December 2, 2024, addressing the issue of inoperative accounts and unclaimed deposits in commercial banks (excluding Regional Rural Banks). The RBI highlighted concerns regarding the high number of inactive or frozen accounts, attributed to prolonged inactivity or pending KYC updates. The RBI urged banks to reduce such accounts by improving the process of account activation and enabling smooth KYC updates through mobile/internet banking and other methods. Additionally, the circular emphasizes the importance of facilitating uninterrupted credit to beneficiaries of government schemes like DBT/EBT, even if their accounts have become inoperative. The RBI recommended conducting special campaigns to help activate such accounts, particularly for underprivileged customers. Banks are also advised to monitor and report their progress on reducing inoperative accounts to the Customer Service Committee (CSC) and provide regular updates through the DAKSH portal.
Reserve Bank of India
RBI/2024-25/91
DoS.CO.PPG.SEC.12/11.01.005/2024-25 Dated: December 02, 2024
The Chairman / Managing Director / Chief Executive Officer
All Commercial Banks (excluding Regional Rural banks)
Madam / Dear Sir,
Inoperative Accounts / Unclaimed Deposits in banks
A reference is invited to RBI circular DOR.SOG (LEG).REC/64/09.08.024/2023-24 dated January 1, 2024 on the captioned subject. It requires banks, among other things, to undertake an annual review of accounts/ deposits where there are no customer induced transactions for more than a year; segregation in their Core Banking Solution of accounts opened for credit of scholarship amount and/ or Direct Benefit Transfer (DBT)/ Electronic Benefit Transfer (EBT) under Government Schemes to facilitate credit of DBTs even if such accounts have become inoperative; and take steps to trace the customers of these accounts/ deposits. It also contains operational guidelines for activation of such accounts/ deposits, customer awareness measures such as public awareness and financial literacy campaigns to be undertaken by banks and requires information on the process for activation of such accounts/ deposits to be displayed on the banks’ websites and branches.
2. The Department of Supervision, RBI, recently conducted an analysis, which revealed that the number of inoperative accounts/ unclaimed deposits in several banks was on the higher side vis-a-vis their total deposits as well as in absolute terms. The reasons were attributed to either inactivity for a long time or pending updation/ periodic updation of KYC in such accounts. Reportedly, there were instances of customers facing inconvenience when they approached the bank branches for activation of inoperative accounts including inadvertent errors in customer details such as mismatch in name, etc. It was also observed that a few banks have a large pendency of accounts that are due for updation/ periodic updation of KYC, resulting in such accounts getting frozen for further transactions as per bank’s internal policies.
3. The banks are, therefore, advised to take necessary steps urgently to bring down the number of inoperative/ frozen accounts and make the process of activation of such accounts smoother and hassle free, including by enabling seamless updation of KYC through mobile/internet banking, non-home branches, Video Customer Identification Process, etc. While the accounts of beneficiaries of various Central/ State government schemes like DBT/EBT etc., are required to be segregated to facilitate uninterrupted credit of such DBT/EBT amounts in their accounts, instances have been observed where the accounts of such beneficiaries have been frozen due to other factors such as pending updation/ periodic updation of KYC. Since these accounts mostly pertain to the people from the underprivileged sections of the society, the banks may facilitate the process of activation of accounts by taking an empathetic view in such cases. The banks may also organise special campaigns for facilitating activation of inoperative/ frozen accounts. Besides, the banks may also facilitate Aadhaar updation for customers through the branches providing Aadhaar related services. Instructions have been issued separately to SLBCs to proactively monitor the situation in their respective jurisdictions with a view to minimise customer inconvenience.
4. The progress in reduction of inoperative/ frozen accounts and the special efforts made by the banks in this regard, may be monitored by the Customer Service Committee (CSC) of the Board. In addition, the banks are also advised to report the same on a quarterly basis to the respective Senior Supervisory Manager (SSM) through DAKSH portal, starting from the quarter ending December 31, 2024.
5. A copy of this Circular shall also be placed before the CSC of the Board in its next meeting along with a monitorable action plan for ensuring full compliance in this regard.
Yours faithfully,
(Tarun Singh)
Chief General Manager
