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The Reserve Bank has prodded bankers to resolve the mounting issue of inoperative accounts and the huge amount of unclaimed deposits in them by asking lenders to monitor the resolution process at the board level.
In a circular to all heads of banks Monday, the regulator advised banks 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 updating of KYC through mobile/internet banking, non-home branches, video customer identification process etc.
The first circular was issued on January 2, 2024 with effective implementation date from April 1.
According to government statistics, as of end 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 December 2023, the finance ministry told Parliamentarians that the amount of unclaimed deposits in banks jumped 28 percent to Rs 42,270 crore as of March 2023 as against Rs 32,934 crore in FY22, while a stupendous Rs 1 trillion, by conservative estimates, is lying with banks under the head of inoperative accounts.
Of the total unclaimed deposits of Rs 42,270 crore, only Rs 6,087 crore were with private banks, with public sector banks accounting for the bulk at Rs 36,185 crore.
While the accounts of beneficiaries of various central/state 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 updating/ periodic updating of KYC, the regulator said in the circular.
“Since these accounts mostly pertain to the people from the underprivileged sections of the society, the banks may facilitate the process of activation of accounts by taking an empathetic view in such cases,” it added.
Banks are also advised to organise special campaigns for facilitating activation of inoperative/ frozen accounts. Besides, the banks may also facilitate Aadhaar updating for customers through the branches providing Aadhaar related services.
Instructions have been issued separately to state level banking committees to proactively monitor the situation in their respective jurisdictions with a view to minimise customer inconvenience.
“The progress in reduction of 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, banks are also advised to report the same on a quarterly basis to the respective senior supervisory manager through the Daksh portal, starting from the quarter ending December 2024," the circular said.
The banks are also advised to place a copy of the latest circular before the CSC of the board in its next meeting along with a monitorable action plan for ensuring full compliance in this regard.
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