News Brief

RBI Issues Revised Guidelines for Inoperative Accounts And Unclaimed Deposits In Banks: Here's All You Need To Know

Kuldeep NegiJan 02, 2024, 03:45 PM | Updated 03:45 PM IST
Reserve Bank of India (RBI). (Representative Image via Getty Images)

Reserve Bank of India (RBI). (Representative Image via Getty Images)


The Reserve Bank of India has asked banks to conduct yearly review of accounts that have been inactive for more than a year, as well as term deposit accounts that lack a clear renewal mandate and where the funds remain untouched post-maturity.

It also prohibited banks from imposing penalty fees for not maintaining a minimum balance in any account labeled as inoperative, or for activation of inoperative accounts.

The instructions are part of fresh guidelines for inoperative accounts and unclaimed deposits with the aim of reducing the quantum of unclaimed deposits and frauds and improving grievance redressal.

The revised framework, which comes after a review by the central bank, includes measures to be put in place by banks.

These include the categorization of such accounts, regular assessments, methods to prevent fraud, speed up the resolution of complaints, track account holders or their appointed nominees/heirs, settle claims, and manage the process of closing accounts.

The guidelines are applicable to all commercial and co-operative banks and will come into effect from 1 April 2024.

However, they will not be applicable for zero-balance accounts opened for credit of scholarship amount or Direct Benefit Transfer under Central and State government schemes.

According to the new framework, banks will need to notify account and deposit holders via letters, emails, or through their registered phone numbers about any inactivity over the past year.

They will also need to warn them that their account will turn 'inoperative' if no transactions are made during the 'extended period' of the next one year.


It further explained that if a client has multiple accounts, each account or deposit must be evaluated separately.

In case of unresponsive customers, banks will need to enquire into the whereabouts of account-holders or nominees/heirs.

Inoperative accounts may also later be reactived subject to fresh KYC documentation and a second level of authorisation.

In order to mitigate fraud risks, the banks will need to regularly monitor inoperative accounts, which have been reactivated, for at least six months, without the knowledge and notice of the customers and the dealing staff and maintain system logs.

Banks will also have to make sure that inoperative and reactivated accounts, as well as unclaimed deposits, undergo a concurrent audit.

Additionally, banks could contemplate implementing a cooling off period upon reactivation, limiting both the number and the sum of transactions.

Banks will also need to display details of unclaimed deposits, which have been transferred to the RBI-maintained Depositor Education and Awareness Fund (DEA), on a monthly basis on their websitesor branches.

They are also required to share details about the procedure for activating inoperative accounts or unclaimed deposits, as well as how to claim the balances within them.

Currently, the credit balance in any deposit account that has been inoperative for at least 10 years, or any amount that has been unclaimed for 10 years, is required to be transferred by banks to the DEA Fund.

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