(This article has been updated)
The Reserve Bank of India (RBI) has released guidelines for banks for classification of unclaimed deposits and inoperative accounts. The guidelines will take effect on April 1.
Key features of the revised guidelines:
Revised classification of inoperative accounts: Banks will now classify an account as 'inoperative' if there are no customer-induced transactions for over two years. This includes any monetary transaction, KYC update, or non-financial transaction such as balance enquiries or requests for cheque books.
Review mechanism for accounts: Banks are mandated to conduct annual reviews of accounts with no customer-induced transactions for over a year. Customers will be informed via letters, emails, or SMS if their accounts risk becoming inoperative, and will be given an extended period to reactivate the account.
Handling government and scholarship accounts: These accounts will be segregated in the bank’s systems to avoid disruption in government payments.
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Fraud prevention and security measures: To prevent fraud, banks will regularly audit inoperative accounts. Any transaction in reactivated accounts will be monitored for at least six months. Banks are also required to implement stringent measures to protect customer data and prevent unauthorised access.
Customer awareness and activation process: Banks will provide clear instructions on their websites and in branches for customers on how to activate inoperative accounts or claim unclaimed deposits. They will also conduct public awareness campaigns to educate the public on these processes.
Interest and charges: No penal charges will be levied on inoperative accounts, nor will banks charge fees for reactivating such accounts. Interest on savings accounts will continue to be credited regularly, regardless of account activity.
Unclaimed deposit display: Banks will host details of unclaimed deposits, including account holders' names and addresses (excluding pin codes), on their websites. A search facility will allow the public to check for unclaimed deposits, facilitating the identification and recovery of unclaimed funds.