UCBs: Exempt Scholarship & DBT Accounts from Dormant Tag
Current · Source: Reserve Bank of India · RBI/2013-14/300 · issued 30 Sep 2013 · ~2 min read
Quick answerRBI directs UCBs to assign a separate product code in CBS for accounts receiving government scholarships or DBT, so they are not classified as inoperative due to lack of transactions for two years. This ensures beneficiaries continue to receive credits without disruption.
The rule, in the simplest words
Banks must give a special code in their computer system (CBS) to accounts that get government money for scholarships or direct benefit transfers (DBT).
These accounts should NOT be called 'dormant' or 'inactive' just because no one used them for two years.
When someone wants to use these accounts, the bank must check that the person is real (verify signature and identity) to stop fraud.
The bank must not cause any trouble or inconvenience to the customer while doing these checks.
How it plays out — a real example
A co-operative bank branch officer in Indore notices that a student's scholarship account has been flagged as dormant because no transactions happened for two years. She remembers the new RBI rule, assigns the special product code in the CBS, and the account is immediately unmarked. Now the next scholarship credit goes through smoothly, and the student gets the money without delay.
What changed
Previously, savings accounts opened for government scheme benefits (scholarships, DBT) were treated as inoperative if no transactions occurred for two years, causing difficulties in crediting funds. Now, UCBs must assign a distinct product code to these accounts in their CBS, exempting them from the dormant/inoperative classification based on non-operation.
What it means for you
For UCBs, this reduces operational friction and customer complaints when government credits fail due to dormant status. It also lowers the risk of funds being returned or delayed, improving scheme efficiency. However, banks must still exercise due diligence on transactions to prevent fraud, while ensuring customer convenience.
What you must do
Assign a separate product code in your CBS for all accounts opened for government scholarship or DBT credits.
Ensure these accounts are not automatically marked as inoperative/dormant due to lack of customer-initiated transactions for two years.
Implement due diligence checks (e.g., signature verification, identity confirmation) for any operations in these accounts to mitigate fraud risk.
Avoid inconveniencing customers while applying these safeguards.
Who it affects
All Primary (Urban) Co-operative Banks (UCBs), Beneficiaries of government scholarship and DBT schemes, State and Central Government agencies disbursing these benefits
❓ Common questions
Why did RBI issue this circular for UCBs?
State and Central governments reported difficulties crediting scholarships and DBT into accounts that were classified as dormant due to no transactions for two years. This circular resolves that by exempting such accounts from the dormant tag.
What must UCBs do to implement this?
UCBs must create a distinct product code in their Core Banking Solution for these accounts, so the system does not treat them as inoperative. They must also continue due diligence on transactions to prevent fraud.
Does this change affect other types of accounts?
No, this exemption applies only to savings bank accounts specifically opened for credit of scholarship amounts or Direct Benefit Transfer under government schemes. Other accounts remain subject to existing inoperative account norms.
📜 Read the original circular — full text as issued by RBI
RBI/2013-14/300
UBD.BPD.(PCB)CIR No. 23/13.01.000/2013-14
September 30, 2013
The Chief Executive Officers of
All Primary (Urban) Co-operative Banks
Madam/Dear Sir,
Unclaimed Deposits/Inoperative Accounts in UCBs - 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 No.UBD.BPD.(PCB)CIR.No.9/13.01.000/2013-14 dated September 1, 2008 on unclaimed deposits/ inoperative accounts, in terms of which UCBs were advised that a savings as well as 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, 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. In view of the above, UCBs 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 paragraph 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, care may be taken to ensure that the customer is not inconvenienced in any manner.
Yours faithfully,
(A.K.Bera)
Principal Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/300 · issued 30 Sep 2013. The plain-English explanation above is BankPulse’s own independent summary.
Implement due diligence checks (e.g., signature verification, identity confirmation) for any operations in these accounts to mitigate fraud risk.
📜 Compliance
Assign a separate product code in your CBS for all accounts opened for government scholarship or DBT credits.
Ensure these accounts are not automatically marked as inoperative/dormant due to lack of customer-initiated transactions for two years.
Avoid inconveniencing customers while applying these safeguards.
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 Primary (Urban) Co-operative Banks (UCBs), Beneficiaries of government scholarship and DBT schemes, State and Central Government agencies disbursing these benefits), your first concrete step on “UCBs: Exempt Scholarship & DBT Accounts from Dormant Tag” is: “Assign a separate product code in your CBS for all accounts opened for government scholarship or DBT credits.” (RBI issued this 30 Sep 2013).
Circular: RBI/2013-14/300 -- UCBs: Exempt Scholarship & DBT Accounts from Dormant Tag
Issued: 30 Sep 2013
Action required: Assign a separate product code in your CBS for all accounts opened for government scholarship or DBT credits.
Action required: Ensure these accounts are not automatically marked as inoperative/dormant due to lack of customer-initiated transactions for two years.
Action required: Implement due diligence checks (e.g., signature verification, identity confirmation) for any operations in these accounts to mitigate fraud risk.
Action required: Avoid inconveniencing customers while applying these safeguards.
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=8473&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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