02-Jan-2024
2 mins read
Revisions to instructions to banks have been made by the Reserve Bank of India (RBI) in an effort to better manage inactive accounts and unclaimed deposits. The goal of this project is to make it easier for account holders and legitimate claims to get their money back.
Enhanced Communication Efforts
According to the new regulations, banks must make a concerted effort to get in touch with the owners of closed accounts and unclaimed deposits. Letters, emails, or SMS will be used for this outreach, particularly if the contact information is on file with the bank. The designated time for the communication is once a quarter. In addition, banks are directed to get in touch with the individual who brought the account holder to the bank when the account holder’s whereabouts are unclear. As part of the quest to locate the customer, if a nominee has registered, they will also be contacted.
Interest Crediting and No Penalty Charges
An important aspect of the revised instructions is the crediting of interest. Banks must continue to credit interest on savings accounts, regardless of whether the account is operational. Moreover, banks are prohibited from levying penal charges for non-maintenance of minimum balances in inoperative accounts. This measure is designed to protect customers from unnecessary fees and encourage dormant accounts’ reactivation.
Periodic Reviews and Fraud Prevention Measures
The RBI’s guidelines also include directives for banks to conduct periodic reviews and special drives. These are intended to ascertain the customers’ whereabouts or their legal heirs connected to inoperative accounts and unclaimed deposits. This proactive approach is also part of a broader strategy to prevent fraud in such accounts.
Consolidation and Rationalisation of Existing Instructions
The RBI’s decision to revise these instructions comes after a comprehensive review conducted in consultation with various stakeholders. The aim is to streamline the process, making it more efficient and customer-friendly. These guidelines encompass all aspects of managing inoperative accounts and unclaimed deposits, from classification to final claims settlement.
Application and Effective Date
These revised instructions are applicable across all commercial banks, including Regional Rural Banks (RRBs) and Cooperative Banks. The implementation is set to begin on April 1. Through these measures, the RBI seeks to reduce the amount of unclaimed deposits in the banking system and ensure that these funds are returned to their rightful owners or claimants.