Segregate and facilitate credit to DBT/EBT inoperative Accounts says RBI

The RBI on Monday directed banks to immediately reduce the number of inoperative/ Unclaimed Deposits and make activation to facilitate uninterrupted credit of such DBT/EBT amounts to the beneficiaries. Banks should enable seamless KYC updates and organize special campaigns. The progress in reducing such accounts must be reported quarterly to the RBI, starting from December 31, 2024, the circular said.

According to government statistics, as of the end of 2023, over Rs 1 trillion of public money is stuck in inoperative accounts of which Rs 42,270 crore is in the nature of unclaimed deposits.

In a survey recently conducted by the Department of Supervision, RBI revealed that the number of inoperative accounts/ unclaimed deposits in several banks was on the higher side vis-a-vis their total deposits as well as in absolute terms. The reasons were attributed to either inactivity for a long time or pending updation/ periodic updation of KYC in such accounts. It was reported that there were instances of customers facing inconvenience when they approached the bank branches for activation of inoperative accounts including inadvertent errors in customer details such as mismatch in name, etc. It was also observed that a few banks have a large pendency of accounts that are due for updation/ periodic updation of KYC, resulting in such accounts getting frozen for further transactions as per the bank’s internal policies.

Given the foregoing, banks are advised to take necessary steps urgently to bring down the number of inoperative/ frozen accounts and make the process of activation of such accounts smoother and hassle-free, including by enabling seamless updation of KYC through mobile/internet banking, non-home branches, Video Customer Identification Process, etc. While the accounts of beneficiaries of various Central/ State government schemes like DBT/EBT etc. are required to be segregated to facilitate uninterrupted credit of such DBT/EBT amounts in their accounts, instances have been observed where the accounts of such beneficiaries have been frozen due to other factors such as pending updation/ periodic updation of KYC. Since these accounts mostly pertain to people from the underprivileged sections of society, the banks may facilitate the process of activation of accounts by taking an empathetic view in such cases. The banks may also organise special campaigns to facilitate the activation of inoperative/ frozen accounts. Besides, the banks may also facilitate Aadhaar updation for customers through the branches providing Aadhaar-related services. Instructions have been issued separately to SLBCs to proactively monitor the situation in their respective jurisdictions to minimise customer inconvenience.