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
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.