What changed
RBI directed State and Central Cooperative Banks to treat savings accounts opened for scholarships and Direct Benefit Transfer (DBT) under government schemes as exempt from the standard two-year dormancy/inoperative classification. Banks must assign a distinct product code in their CBS to these accounts so that the dormancy rule does not block crediting of government proceeds.
What it means for you
Cooperative banks can now seamlessly credit scholarship, DBT, and EBT amounts into accounts that would otherwise be marked dormant due to lack of customer-initiated transactions. This reduces operational friction for government disbursements while requiring banks to maintain fraud controls through signature verification and transaction genuineness checks.
What you must do
- Assign a separate product code in CBS to all zero-balance DBT/scholarship accounts to exempt them from the two-year dormancy rule.
- Ensure due diligence (signature verification, identity check, transaction genuineness) before allowing operations in these accounts.
- Do not inconvenience customers while applying these safeguards.
- Update internal dormant account policies to reflect this exemption for government scheme accounts.
Who it affects
State Cooperative Banks (StCBs), Central Cooperative Banks (CCBs), Government departments disbursing scholarships/DBT, Beneficiaries of Central/State government schemes
Why did RBI issue this circular for cooperative banks?
State and Central governments reported difficulties in crediting scholarships and DBT into zero-balance accounts that had become dormant due to no customer transactions for over two years. RBI relaxed the dormancy rule for these specific accounts.
What due diligence is required for these exempted accounts?
Banks must verify signatures, confirm identity, and ensure transaction genuineness before allowing operations, but without causing inconvenience to the customer.
Does this circular apply to all cooperative banks?
Yes, it applies to all State and Central Cooperative Banks (StCBs and CCBs) as directed by RBI.