The Reserve Bank of India has eased the process to reactivate the dormant accounts and at the same time tightened norms to ensure that frauds are limited in the inoperative accounts where funds remain unclaimed.
The central bank said that activation of such accounts can simply be done by re-submission of know your customer (KYC) details across branches including non-home branches. The process can also be done through video-customer identification process (V-CIP) on account holders’ request, if the facility is being provided by the bank.
Banks are not allowed to charge a fee for activation of inoperative accounts. There should also not be any penal charge for non-maintenance of minimum balances in any account that is classified as inoperative.
Banks are liable to pay interest on savings accounts irrespective of the fact that the account is in operation or not.
RBI told banks to conduct annual reviews in respect of accounts, where there are no customer induced transactions for more than a year.
“The segregation of inoperative accounts is required to be done to reduce the risk of frauds. The transactions in inoperative accounts, which have been reactivated, shall be monitored regularly, for at least six months, at higher levels without the knowledge and notice of the customers and the dealing staff,” RBI said.
The revised instructions will be effective from April 1. All commercial banks including regional rural banks and all co-operative banks would need to follow this.
RBI said that in cases where there is no explicit mandate to renew the term deposit, the banks should review such accounts if the customers have not withdrawn the proceeds after maturity or transferred these to their savings/current account in order to prevent such deposits from becoming unclaimed.
If there are no operations in accounts/deposits for a year, banks would need to inform the account holders. “For the purpose of classifying an account as ‘inoperative’, only customer induced transactions and not bank induced transactions shall be considered,” RBI said.
It said that if communication from banks elicit no response, its banks’ duty to undertake an enquiry to find out the whereabouts of account holder or his/her nominee/legal heirs in case the account holder is deceased.
The regulator has also underscored a need to treat zero-balance accounts a little differently. Banks open zero balance accounts for beneficiaries of central and state government schemes and for students who receive scholarships.
“The banks shall, based on the purpose of opening of the account, segregate the aforementioned accounts in their CBS, so that the stipulation of ‘inoperative’ account is not applicable to these accounts due to their non-operation for a period of more than two years,” RBI said.
