What changed
RBI reviewed earlier instructions (April 2001) and issued new detailed guidelines for UCBs on handling unclaimed deposits and dormant accounts. Banks must now conduct annual reviews of accounts with no operations for over one year, proactively contact customers, and trace whereabouts if letters are returned. The definition of inoperative accounts remains at two years of no customer-initiated transactions, but the process for reclassification and customer outreach is strengthened.
What it means for you
UCBs must step up customer outreach and due diligence to reduce risks from unclaimed deposits. Banks cannot simply let accounts sit idle; they must actively seek account holders or heirs, and if untraceable, use introducers, employers, or phone/email contacts. The classification as inoperative is for internal risk monitoring only—customers must not face inconvenience, and transactions should be monitored discreetly for fraud prevention.
What you must do
- Conduct annual review of all accounts with no customer-initiated transactions for over one year and send written notices to customers.
- If letters are returned undelivered, initiate tracing through introducers, employers, or available contact details (phone/email).
- Classify savings and current accounts as inoperative only after two years of no customer-initiated transactions, excluding bank charges or interest credits.
- Allow operations in inoperative accounts only after due diligence, and ensure the process remains unnoticeable to the customer.
- Monitor transactions in inoperative accounts at a higher level for fraud and suspicious transaction reporting.
Who it affects
All Primary (Urban) Co-operative Banks (UCBs), Customers with dormant or inoperative accounts in UCBs, Legal heirs of deceased account holders
What is the definition of an inoperative account for UCBs?
A savings or current account is treated as inoperative/dormant if there are no customer-initiated debit or credit transactions for over two years. Bank service charges or interest credits are not considered transactions for this purpose.
What should a UCB do if a customer's letter is returned undelivered?
The bank should immediately start an inquiry to find the customer's whereabouts. This includes contacting the introducer, employer, or any other person whose details are available, and using telephone or email if contact numbers are on record.
Can a customer still operate an account classified as inoperative?
Yes, but only after the bank completes due diligence as per its internal procedures. The classification is for internal risk monitoring and should not inconvenience the customer. Transactions should be monitored discreetly at a higher level.