Take prompt action on inoperative accounts & unclaimed deposits: RBI to banks

The Reserve Bank of India (RBI) has asked commercial lenders to take necessary steps to reduce a large number of inoperative accounts and report such data every quarter. The development comes after an analysis by the banking regulator's Department of Supervision highlighted a significantly higher number of inoperative accounts or unclaimed deposits in comparison to total deposits. Directing commercial banks to work towards bringing down the number of inoperative, frozen or dormant accounts urgently, the RBI also asked them to report such data on a quarterly basis. 

The regulator also highlighted, citing the findings of supervisory inspections, that accounts are becoming inoperative or frozen due to a number of problems.

On January 1, the RBI issued a circular directing commercial banks to identify customer accounts with no transactions in the past year. It also directed lenders to update details of the accounts utilised for receiving money under public schemes, in order to ensure operability despite a lack of activity over a given period. 

Currently, banking regulations require financial institutions to ensure that basic details of their customers are maintained and updated from time to time under the RBI's Know Your Customer guidelines.

In its report, the department also pointed out instances where underprivileged customers faced difficulties in activating their frozen bank accounts due to issues such as incorrect names and delayed updates.

The RBI suggested that banks consider adopting various measures to enable a seamless updation of KYC details, such as mobile/internet banking and video-based customer identification.

It directed banks to take an "empathetic view" in such cases, considering organising special campaigns to facilitate the activation of inoperative or frozen accounts.

The banking regulator also asked lenders to facilitate Aadhaar-based updation for customers through branches dedicated to providing Aadhaar-related services.

It stated that instructions had been issued to banking committees at the state level to proactively monitor the situation in their respective jurisdictions.

A few banks are learned to have a large amount of account pendency. 

It also said that bank boards' customer service committees (CSC) may track the special efforts deployed and progress towards reducing the number of inoperative or frozen accounts and unclaimed deposits. 

It directed banks to report the details to their respective senior supervisory managers (SSMs) through the DAKSH portal on a quarterly basis, starting from the quarter ending December 31.