What changed
Previously, banks could charge penalties for not maintaining minimum balance in savings accounts, including inoperative ones. Now, RBI explicitly prohibits such penal charges on any inoperative account, extending earlier protections for Basic Savings Bank Deposit Accounts.
What it means for you
Banks must stop imposing penalties on inoperative accounts for minimum balance shortfalls, reducing fee income from dormant accounts. This aligns with consumer protection measures and may increase operational costs for managing such accounts without penalty revenue.
What you must do
- Update internal systems to identify and exempt all inoperative accounts from minimum balance penalty charges.
- Communicate the policy change to branch staff and customer service teams to ensure compliance.
- Review and revise account terms and conditions to reflect the prohibition on penal charges for inoperative accounts.
- Monitor inoperative accounts regularly to ensure no erroneous penalties are levied.
Who it affects
All scheduled commercial banks excluding RRBs, Customers with inoperative savings accounts, Bank operations and compliance teams
What defines an 'inoperative account' for this rule?
The circular does not define 'inoperative account' explicitly, but generally it refers to accounts with no customer-initiated transactions for a specified period (often 12 or 24 months). Banks should apply their existing definition consistently.
Does this apply to Basic Savings Bank Deposit Accounts (BSBDAs)?
Yes, but BSBDAs were already protected from charges for non-operation/activation under a 2012 circular. This new rule extends similar protection to all inoperative accounts.
Can banks still charge penalties on active accounts for minimum balance non-maintenance?
Yes, the prohibition is specifically for inoperative accounts. Banks may continue to levy penal charges on active accounts, subject to transparent disclosure at account opening as per earlier guidelines.