The Reserve Bank of India (RBI) asks Banks to take necessary steps urgently reduce the number of inoperative/ frozen accounts and make the process of activating such accounts smoother and hassle-free. It said they may also organise special campaigns to facilitate the activation of such accounts.
Banks have been advised to allow activation of such accounts by enabling seamless updation of KYC through mobile/internet banking, non-home branches, Video Customer Identification Processes, etc
The central bank said the progress in reducing inoperative/ frozen accounts and the special efforts made by the banks in this regard, may be monitored by the Customer Service Committee (CSC) of the Board.
In addition, the banks have also advised to report the same on a quarterly basis to the respective Senior Supervisory Manager (SSM) through DAKSH portal (Reserve Bank’s Advanced Supervisory Monitoring System), starting from the quarter ending December 31, 2024.
This directive comes in the backdrop of a recent analysis by the RBI’s Department of Supervision, RBI showing 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, RBI said in a circular to all commercial banks (excluding regional rural banks).
“Reportedly, 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 bank’s internal policies,” RBI said.
The central bank noted that while the accounts of beneficiaries of various Central/ State government schemes like DBT (direct benefit transfer)/EBT (electronic benefit transfer) 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.
RBI emphasised that since these accounts mostly pertain to people from the underprivileged sections of society, banks may facilitate the process of activating accounts by being empathetic in such cases.
The banks can also facilitate Aadhaar updation for customers through the branches providing Aadhaar-related services, it added.
RBI said instructions have been issued separately to State-Level Bankers’ Committees to proactively monitor the situation in their respective jurisdictions and minimise customer inconvenience.