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
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.