RBI Revises Guidelines on Inactive Accounts and Unclaimed Deposits in Banks

Banks have been instructed by the RBI vide circular on Inoperative Accounts /Unclaimed Deposits in Banks- Revised Instructions bearing reference number RBI/2023-24/105 DOR.SOG (LEG).REC/64/09.08.024/2023-24 date 1 January, 2024 to conduct an annual review for accounts that have had no customer transactions for over a year. The objective of the revised guidelines is to enhance the process of refunding money to account holders and to ensure that the legitimate claims of the account holders are swiftly resolved.

The revised guidelines provide for regular monitoring of these accounts and deposits, implementing measures to prevent fraud, establishing a system for addressing complaints in a timely manner, and taking necessary actions to locate customers of inactive accounts, including nominees or legal heirs, for account reactivation, claims settlement, or closure.

Key changes introduced in the revised guidelines are as follows:

  • Annual reviews of accounts with no customer-induced transactions for over a year are required by banks.
  • It is important for banks to carefully review accounts where customers have not withdrawn the proceeds after maturity or transferred them to their savings/current account. This helps prevent these deposits from becoming unclaimed.
  • Account holders are to be notified by banks through letters, emails, or SMS regarding the absence of any transactions in the past year.
  • (i) The alert messages should clearly indicate that the account will become ‘inoperative’ if no transactions take place within the next year.
  • (ii) In such cases, customers will need to provide updated KYC documents for reactivation.
  • Banks are obligated to transfer the credit balance in any deposit account that has been inactive for ten years or longer to the DEA Fund, which is maintained by the RBI.
  • Penal charges cannot be imposed by banks for non-maintenance of minimum balances in any account classified as an inoperative account.
  • It is important to segregate accounts opened for beneficiaries of government schemes and students (with zero balance) in the core banking solution.
  • Savings account interest should be credited regularly, regardless of whether the account is active or not.
  • Reactivation of inoperative accounts necessitates the submission of KYC documents. This process applies to all branches, including non-home branches.
  1. The Video-Customer Identification Process (V-CIP) can also be utilized for reactivation if requested by the account holder.
  2. There are no charges permitted for activating accounts that are not in use.
  3. Only customer-induced transactions, not bank-induced ones, are considered for classification.
  4. Mandates like standing instructions or auto-renewal with no other operations are also treated as customer-induced transactions.
  5. Bank-induced transactions encompass charges, fees, interest payments, penalties, and taxes.
  6. The classification of an account as inoperative will be for a particular account of the customer and not with reference to the customer.

This circular shall be applicable to all Commercial Banks (including RRBs) and all Co-operative Banks.

The revised instructions shall come into effect from April 1, 2024.