What changed
RBI issued detailed instructions for co-operative banks on handling unclaimed deposits and dormant accounts, replacing earlier ad-hoc practices. Banks must now annually review accounts with no operations for over one year, actively trace missing customers, and classify accounts as inoperative only after two years of no customer-initiated transactions. Interest credits and service charges are excluded from transaction counting.
What it means for you
Co-operative banks must step up customer outreach and due diligence for dormant accounts, reducing the risk of fraud and complaints. Banks can no longer passively hold unclaimed deposits without interest; they must attempt to transfer balances or locate heirs. The classification as inoperative is internal for risk management, but customers must not face any service disruption or inconvenience.
What you must do
- Conduct annual review of accounts with no operations for over one year and send written notices to customers.
- If letters return undelivered, initiate enquiry to trace customers or legal heirs using introducers, employers, or phone/email contacts.
- Classify savings and current accounts as inoperative only after two years of no customer-initiated transactions, excluding bank charges and interest credits.
- Segregate inoperative accounts in separate ledgers and monitor transactions at a higher level for fraud prevention without inconveniencing customers.
- Allow operations in such accounts only after enhanced due diligence, including signature verification and identity checks.
Who it affects
State Co-operative Banks (StCBs), Central Co-operative Banks (DCCBs), Customers with dormant or inoperative accounts in co-operative banks
When does an account become inoperative under these rules?
A savings or current account is classified as inoperative if there are no customer-initiated transactions (debit or credit) for two years. Interest credits and service charges are not counted as transactions.
Can customers still use their account after it is classified as inoperative?
Yes, banks must allow operations after due diligence, such as verifying signature and identity. The classification is internal for risk monitoring; customers should not face any inconvenience.
What should banks do if they cannot trace the account holder?
Banks should contact the introducer, employer, or any person whose details are available. For NRIs, email can be used. If still untraceable, banks must continue efforts and may transfer balances to a new account if the customer provides details.