What changed
RBI issued a circular in 2009 specifically for Regional Rural Banks (RRBs) on handling unclaimed deposits and dormant accounts. It mandates annual review of accounts with no operations for over one year, proactive tracing of account holders, and classification of accounts as inoperative after two years of inactivity. The circular also clarifies that service charges or interest credits do not count as transactions for dormancy classification.
What it means for you
RRBs must now systematically identify and manage dormant accounts to reduce fraud risk and address customer complaints. Banks are expected to actively locate account holders or their legal heirs, and if unsuccessful, use introducers or employers for tracing. Importantly, customers should not face inconvenience due to the dormant status, and transactions in such accounts require enhanced due diligence.
What you must do
- Conduct annual review of all savings and current accounts with no customer-initiated transactions for over one year.
- Write to account holders of such accounts to ascertain reasons for inactivity and request operation or transfer of funds.
- If letters are returned undelivered, initiate tracing through introducers, employers, or available contact details.
- Classify accounts as inoperative/dormant after two years of no customer-initiated transactions and maintain them in separate ledgers.
- Allow operations in dormant accounts only after due diligence, including signature verification and identity check, without inconveniencing the customer.
Who it affects
Regional Rural Banks (RRBs), Account holders with inactive savings or current accounts, Legal heirs of deceased account holders
What triggers an account to be classified as inoperative/dormant?
A savings or current account becomes inoperative if there are no customer-initiated transactions (debit or credit) for over two years. Interest credits or service charges by the bank do not count as transactions for this purpose.
Can a customer still operate a dormant account?
Yes, but the bank must perform due diligence to verify the genuineness of the transaction, signature, and identity. The process should be seamless and not inconvenience the customer.
What should RRBs do if they cannot trace the account holder?
RRBs should contact the person who introduced the account holder, the employer, or any other person whose details are available. For NRI accounts, email contact is also advised.