Context:
The Reserve Bank of India (RBI) has issued revised guidelines aimed at simplifying the process for customers and heirs to reactivate inoperative bank accounts and claim unclaimed deposits. The move is designed to improve access to forgotten funds and reduce bureaucratic hurdles, particularly for senior citizens and rural customers.
What Are Inoperative Accounts and Unclaimed Deposits?
- According to RBI norms:
- Inoperative Account: A savings/ current account shall be treated as inoperative, if there are no ‘customer induced transactions’ in the account for a period of over 2 years.
- Unclaimed Deposits: The credit balance in any deposit account maintained with banks, which have not been operated upon for ten years or more, or any amount remaining unclaimed for ten years or more as mentioned in paragraph 3(iii) of the “Depositor Education and Awareness” (DEA) Fund Scheme, 2014.
- Such funds are transferred to the Depositor Education and Awareness (DEA) Fund, maintained by the RBI.
Challenges Faced Earlier
- Physical visits to the home branch were mandatory.
- Process involved lengthy documentation, especially for legal heirs.
- Lack of digital support hindered accessibility, particularly in semi-urban and rural areas.
Key Changes Under the New RBI Guidelines
- Flexible KYC Update Options
- Customers can now update KYC at any branch of their bank, not just the home branch.
- Video-Based Customer Identification
- Banks have been directed to offer video KYC services for reactivating dormant accounts.
- Use of Business Correspondents
- Banks may authorise their business correspondents (BCs) to assist customers in completing KYC formalities in remote areas.
Expected Impact
- Faster reactivation of dormant accounts.
- Improved customer convenience, especially for elderly and rural users.
- Likely increase in the number of claims for unclaimed deposits lying with banks and the DEA Fund.
- Enhanced financial inclusion and trust in the banking system.
BS
