Inoperative Accounts/ Unclaimed Deposits in Banks - Revised Instructions (Amendment) 2025

## Report on RBI Amendment: Inoperative Accounts and Unclaimed Deposits **1. Executive Summary:** This report analyzes the Reserve Bank of India's (RBI) amendment to the instructions regarding inoperative accounts and unclaimed deposits in banks, issued on June 12, 2025. This amendment, effective immediately, focuses on facilitating Know Your Customer (KYC) updates for the activation of such accounts. The key change allows banks to utilize Business Correspondents (BCs) for KYC updates and reiterates the availability of KYC updates at all branches including non-home branches. The amendment aims to streamline the activation process, potentially increasing the number of reactivated accounts and reducing the amount of unclaimed deposits held in the DEA Fund. **2. Introduction:** This report provides an informative overview of the "Inoperative Accounts - Unclaimed Deposits in Banks – Revised Instructions - Amendment, 2025" issued by the RBI on June 12, 2025 (RBI20252652 DOR.SOGLEG.REC3209.08.024202526). The analysis is based solely on the provided text and aims to inform affected institutions about the changes implemented by this amendment. **3. Policy Overview:** * This document is an amendment to existing instructions issued vide circular DOR.SOGLEG.REC64 09.08.0242023 24 dated January 1, 2024. * Core Objective: Based on the text, the core objective of this amendment is to ease the process of activating inoperative accounts and reclaiming unclaimed deposits by facilitating KYC updates. **4. Background and Rationale:** This amendment addresses a need to facilitate KYC updation. The text explicitly states, "There is a need to enable Business Correspondents to facilitate updation of KYC." The existing instructions likely presented challenges in updating KYC for inoperative accounts and unclaimed deposits, leading to difficulties in reactivating these accounts. This amendment seeks to address these challenges by expanding the avenues for KYC updates. **5. Key Provisions / Changes:** The amendment focuses specifically on paragraph 6.1 of the extant instructions. The original paragraph 6.1 is replaced with the following: * **New Rule:** "A bank shall make available the facility of updation of KYC for activation of inoperative accounts and unclaimed deposits at all branches including nonhomebranches. Further, a bank shall endeavour to provide the facility of updation of KYC in such accounts and deposits through VideoCustomer Identification Process V CIP. The VCIP related instructions under Master Direction Know Your Customer KYC Direction, 2016 dated February 25, 2016 as updated from time to time shall be adhered to by the bank. Additionally, the services of an authorised Business Correspondent of the bank may be utilized for activation of inoperative accounts as prescribed in paragraph 38aiia of the above Master Direction." * **Difference/Effect:** The amendment allows banks to use authorised Business Correspondents (BCs) for KYC updates related to the activation of inoperative accounts, as prescribed in paragraph 38aiia of the Master Direction Know Your Customer KYC Direction, 2016. Furthermore, the amendment reinforces the requirement for banks to offer KYC update facilities at all branches, including non-home branches, and encourages the use of Video-based Customer Identification Process (VCIP). The VCIP should be adhered to as per the Master Direction Know Your Customer KYC Direction, 2016, as updated from time to time. This expands the avenues available to customers for updating their KYC information, particularly benefiting those who may not have easy access to their home branch. **6. Target Audience and Stakeholders:** The primary target audience includes: * **Commercial Banks (including RRBs) and Cooperative Banks:** These institutions are directly instructed to implement the changes. * **Customers with Inoperative Accounts and Unclaimed Deposits:** These individuals or entities will benefit from the easier KYC update process, facilitating the reactivation of their accounts. * **Business Correspondents:** This policy will allow them to provide KYC services to customers of the bank. **7. Implementation Aspects (Inferred):** * **Responsible Agency/Bodies:** The Reserve Bank of India (RBI) is the issuing and regulatory body. Commercial Banks (including RRBs) and Cooperative Banks are responsible for implementing the changes. * **Timelines:** The amended instructions are effective immediately (June 12, 2025). * Banks are required to update their procedures to allow Business Correspondents to facilitate KYC updates and to ensure KYC update facilities are available at all branches, including non-home branches. Banks are also encouraged to use VCIP. Banks are also directed to ensure that KYC updates through VCIP adhere to the existing KYC Master Direction, as amended. **8. Expected Outcomes / Impact of Changes:** The expected outcomes of these specific changes include: * **Increased Reactivation of Inoperative Accounts:** By enabling BCs to assist with KYC updates, the amendment aims to reduce the friction in reactivating accounts, leading to a higher number of accounts being reactivated. * **Reduction in Unclaimed Deposits Transferred to DEA Fund:** Easier KYC updates should lead to more successful claims on deposits, thus reducing the amount of unclaimed deposits transferred to the Depositor Education and Awareness (DEA) Fund. * **Enhanced Customer Convenience:** Providing multiple channels for KYC updates (all branches, VCIP, and BCs) enhances customer convenience and accessibility. * **Increased Efficiency:** Utilizing BCs and VCIP could streamline the KYC update process, making it more efficient for both banks and customers. **9. Conclusion:** The RBI's amendment to the instructions regarding inoperative accounts and unclaimed deposits represents a significant step towards easing the process of KYC updates and account reactivation. By expanding the channels for KYC updates to include Business Correspondents and VCIP, the RBI aims to increase the number of reactivated accounts, reduce unclaimed deposits, and enhance customer convenience. The immediate implementation of this amendment requires prompt action by banks to update their procedures and inform their customers about the new facilities. The amendment will likely contribute to greater financial inclusion and efficiency in the banking sector.

Key Entities Referenced