RBI Clarifies Inoperative Account Rules for SB Accounts with FD Interest Credits (2009 Circular)
Current · Source: Reserve Bank of India · RBI/2009-10/202 · issued 30 Oct 2009 · ~2 min read
Quick answerRBI clarifies that a savings account receiving FD interest credits per customer mandate remains operative. It is not treated as inoperative until two years after the last such credit entry.
The rule, in the simplest words
If a savings account only gets Fixed Deposit (FD) interest because the customer gave a mandate (instruction), the account stays operative (active).
The account becomes inoperative (inactive) only after two years from the date of the last interest credit (money added).
Banks must count those FD interest credits as customer‑induced transactions when deciding if an account is operative.
Update core banking systems and train staff so they do not label such accounts as dormant too early.
How it plays out — a real example
Rohit, a savings‑account officer in Jaipur, sees that Mrs. Patel's account receives only quarterly FD interest credits as per her mandate. He checks the last credit date and, seeing it was three months ago, keeps the account marked as operative, assuring her that the account will stay active until two years pass without another interest credit.
What changed
In 2009, RBI addressed confusion over whether a savings account that only receives FD interest credits (via customer mandate) should be classified as inoperative after two years of no other transactions. The circular clarifies that such interest credits are customer-induced transactions, so the account stays operative as long as these credits occur. The inoperative clock resets from the date of the last FD interest credit.
What it means for you
Banks must not classify savings accounts as inoperative solely because the only activity is periodic FD interest credits per customer mandate. This prevents premature freezing or dormancy tagging, reducing customer complaints and operational burden. Lenders need to update their internal systems to recognize mandate-driven credits as valid transactions for account status purposes.
What you must do
Update your core banking system to treat FD interest credits (via customer mandate) as customer-induced transactions for inoperative account classification.
Train branch and operations staff on this clarification to avoid wrongly tagging such accounts as dormant.
Review existing inoperative account lists and reclassify any savings accounts that were marked dormant solely due to FD interest credits.
Communicate this policy to customer service teams to handle related queries accurately.
Who it affects
All scheduled commercial banks (excluding RRBs), Retail banking operations teams, Customer service and branch staff, Core banking system administrators
❓ Common questions
Does a savings account with only FD interest credits become inoperative after two years?
No. As long as FD interest is credited per the customer's mandate, it counts as a customer-induced transaction, keeping the account operative. The two-year inoperative period starts only after the last such credit.
What if the FD matures and interest credits stop? When does the account become inoperative?
Once the last FD interest credit is made, the savings account can be treated as inoperative only after two years from that date, provided no other customer-induced transactions occur.
Should we consider third-party credits (like salary) as customer-induced for inoperative status?
This circular specifically addresses FD interest credits via mandate. For other third-party credits, refer to the existing master circular (July 1, 2009) which says both debit and credit transactions induced by customers or third parties should be considered.
📜 Read the original circular — full text as issued by RBI
RBI/2009-10/202
DBOD.Leg. No.BC. 55 /09.07.005 /2009-10
October 30, 2009
All Scheduled Commercial Banks
(Excluding RRBs)
Dear Sir,
Inoperative Accounts
Please refer to Paragraph 24.2 (iv) of our Master circular DBOD. No.Leg. BC. 9 / 09.07.006 / 2009-10 dated July 1, 2009 on 'Customer Service' in terms of which a savings as well as current account should be treated as inoperative / dormant if there are no transactions in the account for a period over two years. Further, in terms of Paragraph 24.2 (vi), for the purpose of classifying an account as inoperative, both the types of transactions i.e., debit as well as credit transactions induced at the instance of customers as well as third party should be considered.
2. There may be instances where the customer has given a mandate for crediting the interest on Fixed Deposit account to the Savings Bank account and there are no other operations in the Savings Bank account. Some doubts have arisen whether such an account is to be treated as inoperative account after two years.
3. In this connection, we clarify that since the interest on Fixed Deposit account is credited to the Savings Bank accounts as per the mandate of the customer, the same should be treated as a customer induced transaction. As such, the account should be treated as operative account as long as the interest on Fixed Deposit account is credited to the Savings Bank account. The Savings Bank account can be treated as inoperative account only after two years from the date of the last credit entry of the interest on Fixed Deposit account.
Yours faithfully,
(B. Mahapatra)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/202 · issued 30 Oct 2009. The plain-English explanation above is BankPulse’s own independent summary.
Train branch and operations staff on this clarification to avoid wrongly tagging such accounts as dormant.
💻 IT / Systems
Update your core banking system to treat FD interest credits (via customer mandate) as customer-induced transactions for inoperative account classification.
📜 Compliance
Review existing inoperative account lists and reclassify any savings accounts that were marked dormant solely due to FD interest credits.
Communicate this policy to customer service teams to handle related queries accurately.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are an IT/Systems lead at a bank this circular applies to (All scheduled commercial banks (excluding RRBs), Retail banking operations teams, Customer service and branch staff, Core banking system administrators), your first concrete step on “RBI Clarifies Inoperative Account Rules for SB Accounts with FD Interest Credits (2009 Circular)” is: “Update your core banking system to treat FD interest credits (via customer mandate) as customer-induced transactions for inoperative account classification.” (RBI issued this 30 Oct 2009).
Circular: RBI/2009-10/202 -- RBI Clarifies Inoperative Account Rules for SB Accounts with FD Interest Credits (2009 Circular)
Issued: 30 Oct 2009
Action required: Update your core banking system to treat FD interest credits (via customer mandate) as customer-induced transactions for inoperative account classification.
Action required: Train branch and operations staff on this clarification to avoid wrongly tagging such accounts as dormant.
Action required: Review existing inoperative account lists and reclassify any savings accounts that were marked dormant solely due to FD interest credits.
Action required: Communicate this policy to customer service teams to handle related queries accurately.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5338&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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