Executive Summary:
This RBI circular addresses the high number of inoperative accounts and unclaimed deposits in banks. It references a previous circular from January 1, 2024, and instructs banks to reduce inoperative/frozen accounts, smooth the activation process, and update KYC seamlessly. Banks must report progress quarterly to the Senior Supervisory Manager (SSM) through the DAKSH portal, starting with the quarter ending December 31, 2024.
Key Points / Main Content:
Annual Review and Segregation:
* Banks must undertake an annual review of accounts/deposits with no customer-induced transactions for over a year.
* Accounts opened for scholarship amounts and/or Direct Benefit Transfer (DBT)/Electronic Benefit Transfer (EBT) under Government Schemes should be segregated in the Core Banking Solution.
Activation and Customer Awareness:
* Banks should take steps to trace customers of inoperative accounts/deposits.
* Operational guidelines for activation, customer awareness measures (public awareness and financial literacy campaigns), and activation processes must be displayed on bank websites and branches.
* Enable seamless KYC updates through mobile/internet banking, non-home branches, and Video Customer Identification Process.
* Banks should take an empathetic view towards beneficiaries of Central/State government schemes (DBT/EBT) and facilitate account activation, even if frozen due to pending KYC updates, and also organise special campaigns for facilitating activation of inoperative frozen accounts.
* Banks may also facilitate Aadhaar updation for customers through the branches providing Aadhaar related services.
Monitoring and Reporting:
* The Customer Service Committee (CSC) of the Board should monitor the progress in reducing inoperative/frozen accounts and special efforts made.
* Banks must report progress quarterly to the respective Senior Supervisory Manager (SSM) through the DAKSH portal, starting from the quarter ending December 31, 2024.
* A copy of the circular and a monitorable action plan for full compliance must be placed before the CSC of the Board in its next meeting.
Impact Analysis:
Commercial Banks (excluding Regional Rural Banks):
* Impact: Required to reduce the number of inoperative and frozen accounts and improve the activation process. Must also comply with KYC updation guidelines and reporting requirements.
* Action Required: Implement measures to reduce inoperative accounts, streamline activation processes, update KYC procedures, monitor progress through the CSC, and report quarterly to the SSM via the DAKSH portal starting December 31, 2024. Place a copy of this circular before the CSC of the Board in its next meeting along with a monitorable action plan for ensuring full compliance.
Customers (especially those from underprivileged sections):
* Impact: Experience smoother and hassle-free activation of inoperative accounts, particularly for those receiving DBT/EBT benefits.
* Action Required: Utilize the enhanced KYC updation facilities and participate in any special campaigns organized by banks for account activation.
Department of Supervision, RBI:
* Impact: Oversees the banks' compliance with the circular's directives.
* Action Required: Monitor banks' progress in reducing inoperative accounts and improving activation processes through quarterly reports submitted via the DAKSH portal.
State Level Bankers' Committee (SLBCs):
* Impact: To minimise customer inconvenience.
* Action Required: Proactively monitor the situation in their respective jurisdictions.
Senior Supervisory Manager (SSM):
* Impact: Receives and reviews quarterly reports from banks on the reduction of inoperative accounts.
* Action Required: Monitor the progress reported by banks via the DAKSH portal.
Key Entities Referenced
Reserve Bank of India: The central bank of India, the issuer of this circular.
Inoperative Accounts Unclaimed Deposits: The subject matter of the circular, concerning accounts with no customer-induced transactions or unclaimed funds.
Core Banking Solution: The system banks use to manage accounts, where accounts for scholarship and DBT should be segregated.
Direct Benefit Transfer (DBT): A government scheme for transferring benefits directly to beneficiaries' accounts.
Electronic Benefit Transfer (EBT): A system for transferring government benefits electronically, similar to DBT.
KYC (Know Your Customer): A process used by banks to verify the identity of their customers, the pending update of which is causing accounts to be frozen.
Aadhaar: A 12-digit individual identification number issued by the Unique Identification Authority of India.
State Level Bankers' Committee (SLBCs): Committees that coordinate banking activities at the state level, instructed to monitor customer inconvenience related to inoperative accounts.
भारतीय �रजवर् बैंक
______________________RESERVE BANK OF INDIA ______________________
www.rbi.org.in
RBI/2024-25/91
DoS.CO.PPG.SEC.12/11.01.005/2024-25 December 02, 2024
The Chairman / Managing Director / Chief Executive Officer
All Commercial Banks (excluding Regional Rural banks)
Madam / Dear Sir,
Inoperative Accounts / Unclaimed Deposits in banks
A reference is invited to RBI circular DOR.SOG (LEG).REC/64/09.08.024/2023-24
dated January 1, 2024 on the captioned subject. It requires banks, among other
things, to undertake an annual review of accounts/ deposits where there are no
customer induced transactions for more than a year; segregation in their Core
Banking Solution of accounts opened for credit of scholarship amount and/ or Direct
Benefit Transfer (DBT)/ Electronic Benefit Transfer (EBT) under Government
Schemes to facilitate credit of DBTs even if such accounts have become inoperative;
and take steps to trace the customers of these accounts/ deposits. It also contains
operational guidelines for activation of such accounts/ deposits, customer awareness
measures such as public awareness and financial literacy campaigns to be
undertaken by banks and requires information on the process for activation of such
accounts/ deposits to be displayed on the banks’ websites and branches.
2. The Department of Supervision, RBI, recently conducted an analysis, which
revealed that the number of inoperative accounts/ unclaimed deposits in several
banks was on the higher side vis-a-vis their total deposits as well as in absolute
terms. The reasons were attributed to either inactivity for a long time or pending
updation/ periodic updation of KYC in such accounts. Reportedly, there were
instances of customers facing inconvenience when they approached the bank
branches for activation of inoperative accounts including inadvertent errors in
customer details such as mismatch in name, etc. It was also observed that a few
banks have a large pendency of accounts that are due for updation/ periodic
updation of KYC, resulting in such accounts getting frozen for further transactions as
per bank’s internal policies.
पयर्वेक्षण िवभाग, के�ीय कायार्लय, मेकर टावर - एफ़, कफ परेड, कोलाबा, मुंबई - 400 005
टेलीफोन: 022 - 6997 3817 ई-मेल: ppgdos@rbi.org.in
Department of Supervision, Central Office, Maker Tower - F, Cuffe Parade, Colaba, Mumbai - 400 005
Telephone: 022 - 6997 3817 e-mail: ppgdos@rbi.org.in
बैंक िह�ी में पत्राचार का �ागत करता है।3. The banks are, therefore, advised to take necessary steps urgently to bring down
the number of inoperative/ frozen accounts and make the process of activation of
such accounts smoother and hassle free, including by enabling seamless updation of
KYC through mobile/internet banking, non-home branches, Video Customer
Identification Process, etc. While the accounts of beneficiaries of various Central/
State government schemes like DBT/EBT etc., are required to be segregated to
facilitate uninterrupted credit of such DBT/EBT amounts in their accounts, instances
have been observed where the accounts of such beneficiaries have been frozen due
to other factors such as pending updation/ periodic updation of KYC. Since these
accounts mostly pertain to the people from the underprivileged sections of the
society, the banks may facilitate the process of activation of accounts by taking an
empathetic view in such cases. The banks may also organise special campaigns for
facilitating activation of inoperative/ frozen accounts. Besides, the banks may also
facilitate Aadhaar updation for customers through the branches providing Aadhaar
related services. Instructions have been issued separately to SLBCs to proactively
monitor the situation in their respective jurisdictions with a view to minimise customer
inconvenience.
4. The progress in reduction of inoperative/ frozen accounts and the special efforts
made by the banks in this regard, may be monitored by the Customer Service
Committee (CSC) of the Board. In addition, the banks are also advised to report the
same on a quarterly basis to the respective Senior Supervisory Manager (SSM)
through DAKSH portal, starting from the quarter ending December 31, 2024.
5. A copy of this Circular shall also be placed before the CSC of the Board in its next
meeting along with a monitorable action plan for ensuring full compliance in this
regard.
Yours faithfully,
(Tarun Singh)
Chief General Manager