In a bid to enhance financial transparency and streamline procedures, the Reserve Bank of India (RBI) has issued comprehensive guidelines on the treatment of inoperative accounts and unclaimed deposits. These guidelines, effective from April 1, 2024, address various aspects, including periodic reviews, fraud prevention measures, customer tracing efforts, and more.
Informing about the same, RBI said in a notification, “As a measure to assist the account holders and with a view to consolidating and rationalising the extant instructions on inoperative accounts, a review was carried out in consultation with all stakeholders. Based on the review, it has been decided to issue comprehensive guidelines on the measures to be put in place by the banks covering various aspects of classifying accounts and deposits as inoperative accounts and unclaimed deposits, as the case may be, periodic review of such accounts and deposits, measures to prevent fraud in such accounts/deposits, grievance redressal mechanism for expeditious resolution of complaints, steps to be taken for tracing the customers of inoperative accounts/ unclaimed deposits including their nominees/ legal heirs for re-activation of accounts, settlement of claims or closure and the process to be followed by them.”
The instructions are expected to complement the ongoing efforts and initiatives taken by banks and the RBI, to reduce the quantum of unclaimed deposits in the banking system and return such deposits to their rightful owners/ claimants.
Banks shall undertake atleast an annual review in respect of accounts, where there are no customer induced transactions for more than a year. “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there is no explicit mandate to renew the term deposit, the banks should review such accounts if the customers have not withdrawn the proceeds after maturity or transferred these to their savings/current account in order to prevent such deposits from becoming unclaimed,” RBI said.
The banks shall inform the account/deposit holders in writing through letters or email or SMS that there has been no operation in their accounts/deposits in the last one year, as the case may be. The alert messages will also invariably mention that the account would become ‘inoperative’ if no operations are carried out during the next one year and, the account holder would be required to submit KYC documents afresh for reactivating the account in such case.
The bank also stated that zero balance accounts are not to be classified as inoperative if it remains non operative for a period of more than two years. “Central and State governments have been expressing difficulty in crediting cheques/Direct Benefit Transfer/ Electronic Benefit Transfer/ scholarship amount in these accounts as they are also classified as inoperative due to non-operation for two years,” RBI said.
The transactions in inoperative accounts, which have been reactivated, will be monitored regularly, for at least six months, at higher levels (i.e. by controlling authorities of the concerned branch) without the knowledge and notice of the customers and the dealing staff.
The issuance of these comprehensive guidelines signifies a significant step towards reducing unclaimed deposits in the banking system.