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:
- A savings or current account becomes inoperative if there has been no customer-initiated transaction for 10 years.
- Term deposits, too, become unclaimed if not withdrawn within 10 years of maturity.
- 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.
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