What changed
RBI's supervisory analysis found many banks have a high share of inoperative/unclaimed deposits, often due to long inactivity or pending KYC updates. Customers face inconvenience during activation, including name mismatches. The circular now mandates banks to urgently reduce these accounts, make activation hassle-free, and allow KYC updates through mobile/internet banking, non-home branches, and Video KYC. Special empathy is required for DBT/EBT beneficiaries whose accounts may be frozen due to KYC pendency.
What it means for you
Banks must prioritize clearing backlogs of inoperative and frozen accounts, especially those linked to government benefit schemes. The RBI expects seamless activation processes and digital KYC options to reduce customer friction. Quarterly reporting to Senior Supervisory Managers via DAKSH portal adds a new compliance layer. Customer Service Committees of boards must monitor progress and submit action plans.
What you must do
- Conduct an urgent review and take steps to reduce the number of inoperative/frozen accounts, focusing on DBT/EBT beneficiaries.
- Enable seamless KYC updation through mobile/internet banking, non-home branches, and Video Customer Identification Process (VCIP).
- Organize special campaigns to facilitate activation of inoperative/frozen accounts, including Aadhaar updation at branches.
- Report quarterly progress on reduction of such accounts to the respective Senior Supervisory Manager via DAKSH portal, starting quarter ending December 31, 2024.
- Place this circular before the Customer Service Committee (CSC) of the Board with a monitorable action plan for full compliance.
Who it affects
All commercial banks (excluding Regional Rural Banks), Customer Service Committees (CSC) of bank boards, Bank branches handling DBT/EBT accounts, Senior Supervisory Managers (SSMs) at RBI
What is the deadline for the first quarterly report on inoperative accounts?
Banks must report progress for the quarter ending December 31, 2024, to their Senior Supervisory Manager via the DAKSH portal.
Are DBT/EBT beneficiary accounts exempt from being frozen due to KYC pendency?
No, but RBI directs banks to take an empathetic view and facilitate activation for such accounts, as they belong to underprivileged sections. Banks must segregate these accounts to ensure uninterrupted credit of benefits.
What digital channels must banks provide for KYC updation?
Banks must enable KYC updation through mobile/internet banking, non-home branches, and Video Customer Identification Process (VCIP).