The Reserve Bank of India on Monday issued revised instructions on Inoperative Accounts /Unclaimed Deposits in Banks. According to the revised guidelines, a savings/ current account shall be treated as inoperative, if for over two years there are no ‘customer-induced transactions’ in that account.
Customer induced transactions are;
(a) Financial transactions like debit/credit transactions in the account, or
(b) non-financial transactions like checkbook/credit card/debit card requests, internet banking/mobile banking application, balance inquiry, etc. or
(c) KYC updation is done in face-to-face physical mode or through digital, in the account for over two 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.
Whenever, the amount lying in the inoperative account is transferred to the DEA Fund, a unique number (UDRN) is generated through CBS and assigned to each of the transferred accounts. The number shall be such that the account holder or the bank branch where the account is maintained cannot be identified by any third party.
Review of inoperative Accounts:
Banks are required to undertake a review of the SB/Current accounts where there are no customer-induced transactions for more than a year. Such review is necessary at least once in a year.
Term deposits: In cases where there is no explicit mandate to renew the term deposit, the banks should review such accounts if the customers have not withdrawn the proceeds after maturity or transferred these to their savings/current account to prevent such deposits from becoming unclaimed.
Standing Instruction/ auto-renewal instruction:
In case the customer has given a mandate like Standing Instructions (SI)/auto-renewal instructions and there are no other operations in the Savings /Current account or the Term Deposit. These transactions shall also be treated as customer-induced transactions.
Multiple accounts maintained by the customers:
The classification of an account as inoperative shall be for a particular account of the customer and not concerning the customer. In case a customer is maintaining more than one account, all such accounts/deposits shall be assessed individually to classify them as inoperative accounts/ unclaimed deposits, as the case may be.
The account is inoperative due to the shifting of the primary account to another bank:
If the customer is operating in another bank and the account remains inoperative in the existing bank, in such cases account holder may be requested to provide the details of the new bank account with authorisation to enable the bank to transfer the balance from the existing bank account.
Levy of Charges:
Banks should not levy penal charges for nonmaintenance of minimum balances in any account that is classified as an inoperative account. No charges shall be levied for the activation of inoperative accounts.
Information to the customers:
Banks shall inform the account/deposit holders in writing through letters email or SMS (if the email and mobile number are registered with the bank) that there has been no operation in their accounts/deposits in the last year, as the case may be. The alert messages shall invariably mention that the account would become ‘inoperative’ if no operations are carried out during the next year and, the account holder would be required to submit KYC documents afresh for reactivating the account in such case.
Undelivered letters:
In case the letter sent by the bank is returned undelivered or no response is received through registered email, the bank shall immediately undertake an inquiry to find out the whereabouts of the account holder or his/her nominee/legal heirs or introducer of the account in case the account holder is deceased. However, if a response is received from the account holder giving the reasons for not operating the account, the banks shall continue to classify the account as operative for one more year and the account holder shall be advised to operate the account within one year (hereinafter referred to as ‘extended period’). In case the account holder still fails to operate the account within the extended period, the banks shall classify the said account as an inoperative account after the expiry of the extended period.
Accounts opened for credit of scholarship amount and credit of Direct Benefit Transfer under Government Schemes:.
The banks open zero-balance accounts for beneficiaries of Central/State government schemes and for students who receive scholarships. Central and State governments
have been expressing difficulty in crediting cheques/Direct Benefit Transfers/ Electronic Benefit Transfers/ scholarship amounts in these accounts as they are also classified as inoperative due to non-operation for two years. The banks shall, based on the purpose of opening the account, segregate the aforementioned accounts in their CBS, so that the stipulation of an ‘inoperative’ account does not apply to these accounts due to their non-operation for more than two years. Banks should exercise due diligence while allowing operations in these accounts to avoid the risk of fraud, etc.
Activation of inoperative/unclaimed balance account:
Banks shall activate the inoperative accounts/unclaimed deposits, including those that are under freeze by orders of various agencies like Courts, Tribunals, and Law Enforcement Agencies, only after adhering to customer due diligence (CDD) as per KYC guidelines provided in the master direction of RBI updated from time to time. KYC updating can be done through the Video-Customer Identification Process (V-CIP) if the customer requests the same. The banks shall ensure that activation of inoperative accounts/ unclaimed deposits in CBS necessarily requires a second level of authorisation by another officer at the same or higher level (i.e., through maker and checker). System logs shall invariably be maintained in case of any activity in or activation of inoperative accounts/unclaimed deposits for concurrent audit purposes. The preservation period of such system logs shall be as per the internal guidelines of the bank.
Banks shall host the details of unclaimed deposits:
Banks shall host the details of unclaimed deposits {only name, address (without pin code), and Unclaimed Deposit Reference Number (UDRN)}, which have been transferred to DEA Fund of RBI on their respective websites, which shall be updated regularly, at least every month. The banks, that do not have their websites, shall make available the above list of unclaimed deposits in their respective branches.
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