Govt scheme accounts: No dormant tag for DBT/scholarship credits
Current · Source: Reserve Bank of India · RBI/2013-14/262 · issued 17 Sep 2013 · ~2 min read
Quick answerBanks may assign a separate product code in CBS to savings accounts opened for government DBT, scholarships, or zero-balance schemes. This can exempt them from being classified as inoperative/dormant due to two years of no transactions, ensuring seamless credit of benefits.
The rule, in the simplest words
Banks can give a special code in their computer system (CBS) to accounts used for government benefits like scholarships or Direct Benefit Transfer (DBT).
These accounts will not be called 'dormant' (sleeping) even if no money moves in or out for two years, so government payments can still go in.
Banks must still check that transactions are real and safe, but they should not make it hard for customers to use their money.
How it plays out — a real example
A credit & lending officer in Indore notices that a student's savings account, opened for a state scholarship, has had no activity for three years. Thanks to the new rule, the officer assigns a special product code in the CBS, so the next scholarship credit of ₹5,000 goes through smoothly without the account being flagged as dormant, and the student receives the funds without any hassle.
What changed
Earlier, the 2008 circular advised that savings or current accounts with no transactions for two years be treated as inoperative/dormant. Now, banks may create a distinct product code for accounts opened for government scheme benefits so the dormancy rule does not apply when crediting DBT, scholarships, or similar benefits. Due diligence on transactions remains mandatory, but customer convenience must not be compromised.
What it means for you
For banks, this reduces operational friction in processing government benefit credits into accounts that would otherwise be flagged dormant. It also lowers the risk of customer complaints and ensures timely disbursal of subsidies and scholarships. However, banks must still verify transaction genuineness and identity to prevent fraud, balancing ease with security.
What you must do
Consider assigning a unique product code in your CBS for accounts opened under central/state government DBT, scholarship, or zero-balance schemes.
Ensure the dormancy/inoperative classification does not block credits into these accounts, even if no other transactions occur for over two years.
Implement due diligence checks (signature verification, identity confirmation) for any operations in these accounts without inconveniencing customers.
Update internal policies and staff training to reflect this exemption for government scheme accounts.
Who it affects
All scheduled commercial banks (excluding RRBs), Customers receiving DBT, scholarships, or benefits under government schemes, Bank operations and CBS teams handling account classification
❓ Common questions
Does this circular apply to all savings accounts or only those opened for government schemes?
It applies only to savings accounts specifically opened for crediting scholarships, DBT, EBT, or other central/state government scheme benefits, including zero-balance accounts.
Can these accounts still be used for other transactions without becoming dormant?
Yes, but banks must exercise due diligence on all transactions. The exemption from dormancy classification is only for the purpose of receiving government credits; other operations are subject to normal safeguards.
What happens if a bank does not assign a separate product code?
The account may still be classified as inoperative after two years of no transactions, potentially blocking government benefit credits. Banks are advised to comply to avoid customer inconvenience and operational issues.
📜 Read the original circular — full text as issued by RBI
RBI/2013-14/262
DBOD.No. Leg. BC. 53/09.07.005/2013-14
September 17, 2013
All Scheduled Commercial Banks
(excluding RRBs)
Dear Sir/Madam,
Unclaimed Deposits/Inoperative Accounts in banks –
Treatment of certain savings bank accounts opened for credit of Scholarship
amounts and credit of Direct Benefit Transfer under Government Schemes
Please refer to Circular DBOD. No. Leg.BC.34/09.07.005/2008-09 dated August 22, 2008 on unclaimed deposits/inoperative accounts wherein banks were advised that a savings or current account should be treated as inoperative/dormant if there are no transactions in the account for over a period of two years and the safeguards to be adopted in dealing with such accounts.
2. State and Central Governments have expressed difficulties in crediting cheques/Direct Benefit Transfer/Electronic Benefit Transfer/Scholarships for students, Zero Balance Accounts, etc. into accounts opened for the beneficiaries under various Central/State Government schemes but had been classified as dormant/inoperative due to non-operation of the account for over two years.
3. Keeping the above in view, banks are advised that they may allot a different “product code” in their CBS to all such accounts opened by banks so that the stipulation of inoperative/dormant account due to non-operation does not apply while crediting proceeds as mentioned in para 2 above.
4. In order to reduce the risk of fraud etc., in such accounts, while allowing operations in these accounts, due diligence should be exercised by ensuring the genuineness of transactions, verification of signature and identity, etc. However, it has to be ensured that the customer is not inconvenienced in any manner.
Yours faithfully,
(Rajesh Verma)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/262 · issued 17 Sep 2013. The plain-English explanation above is BankPulse’s own independent summary.
Implement due diligence checks (signature verification, identity confirmation) for any operations in these accounts without inconveniencing customers.
📜 Compliance
Consider assigning a unique product code in your CBS for accounts opened under central/state government DBT, scholarship, or zero-balance schemes.
Ensure the dormancy/inoperative classification does not block credits into these accounts, even if no other transactions occur for over two years.
Update internal policies and staff training to reflect this exemption for government scheme accounts.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (All scheduled commercial banks (excluding RRBs), Customers receiving DBT, scholarships, or benefits under government schemes, Bank operations and CBS teams handling account classification), your first concrete step on “Govt scheme accounts: No dormant tag for DBT/scholarship credits” is: “Consider assigning a unique product code in your CBS for accounts opened under central/state government DBT, scholarship, or zero-balance schemes.” (RBI issued this 17 Sep 2013).
Circular: RBI/2013-14/262 -- Govt scheme accounts: No dormant tag for DBT/scholarship credits
Issued: 17 Sep 2013
Action required: Consider assigning a unique product code in your CBS for accounts opened under central/state government DBT, scholarship, or zero-balance schemes.
Action required: Ensure the dormancy/inoperative classification does not block credits into these accounts, even if no other transactions occur for over two years.
Action required: Implement due diligence checks (signature verification, identity confirmation) for any operations in these accounts without inconveniencing customers.
Action required: Update internal policies and staff training to reflect this exemption for government scheme accounts.
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=8425&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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