Cooperative Banks: DBT & Scholarship Accounts Exempt from Dormancy Rules
Current · Source: Reserve Bank of India · RBI/2013-14/313 · issued 07 Oct 2013 · ~2 min read
Quick answerRBI exempts zero-balance DBT and scholarship accounts at StCBs/CCBs from the two-year dormancy rule. Banks must assign a separate product code in CBS and apply due diligence for transactions without inconveniencing customers.
The rule, in the simplest words
Zero-balance accounts for scholarships and government benefit payments (DBT) are exempt from the two-year dormancy rule at cooperative banks.
Banks must give these accounts a special product code in their computer system (CBS) so the dormancy rule does not block money from the government.
Before letting someone use the account, the bank must check the person's signature and ID and make sure the transaction is real.
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 sees that a student's scholarship account has had no transactions for three years. Because the bank gave it a special product code, the officer can still credit the new scholarship amount without marking the account dormant. He verifies the student's signature and ID before allowing a withdrawal, making sure everything is safe but not causing any hassle.
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
❓ Common questions
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.
📜 Read the original circular — full text as issued by RBI
RBI/2013-14/313
RPCD.RCB.BC.No. 42/07.51.014/2013-14
October 7, 2013
The Chairmen / CEOs
All State and Central Cooperative Banks
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 our Circular RPCD.CO.RF.BC.No. 89/07.38.012008-09 dated February 18, 2009 on unclaimed deposits / inoperative accounts wherein State and Central Cooperative 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, etc. into Zero Balance Accounts and 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, State and Central Cooperative Banks are advised that they may take appropriate steps including allotment of a different 'product code' in their CBS to all such accounts opened by them 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,
(A.Udgata)
Principal Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/313 · issued 07 Oct 2013. The plain-English explanation above is BankPulse’s own independent summary.
Ensure due diligence (signature verification, identity check, transaction genuineness) before allowing operations in these accounts.
📜 Compliance
Assign a separate product code in CBS to all zero-balance DBT/scholarship accounts to exempt them from the two-year dormancy rule.
Do not inconvenience customers while applying these safeguards.
Update internal dormant account policies 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 (State Cooperative Banks (StCBs), Central Cooperative Banks (CCBs), Government departments disbursing scholarships/DBT, Beneficiaries of Central/State government schemes), your first concrete step on “Cooperative Banks: DBT & Scholarship Accounts Exempt from Dormancy Rules” is: “Assign a separate product code in CBS to all zero-balance DBT/scholarship accounts to exempt them from the two-year dormancy rule.” (RBI issued this 07 Oct 2013).
Action required: Assign a separate product code in CBS to all zero-balance DBT/scholarship accounts to exempt them from the two-year dormancy rule.
Action required: Ensure due diligence (signature verification, identity check, transaction genuineness) before allowing operations in these accounts.
Action required: Do not inconvenience customers while applying these safeguards.
Action required: Update internal dormant account policies 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=8491&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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