RBI advises banks to urgently bring down number of frozen accounts
This story was originally published at 20:56 IST on 2 December 2024
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MUMBAI – The Reserve Bank of India has advised banks to take necessary steps to urgently bring down the number of inoperative or frozen accounts, the central bank said in a release Monday. It said the central bank conducted an analysis which revealed that the number of inoperative accounts in several banks was on the higher side, compared with the total number of deposits, the release said.
"Reportedly, there were instances of customers facing inconvenience when they approached bank branches for activation of inoperative accounts, including inadvertent errors in customer details such as mismatch in name, etc. It was also observed that a few banks have a large pendency of accounts that are due for updation or periodic updation of KYC (Know Your Customer), resulting in such accounts getting frozen for further transactions as per the bank's internal policies," the release said.
In January, the central bank had revised instructions for inoperative accounts. It had also said that if an account has not been operated for more than 10 years, then the amount in it should be transferred by the banks to the Depositor Education Awareness Fund maintained by the RBI. The revised guidelines came into effect Apr. 1.
The RBI has urged banks to make the process of activation of such accounts smoother by enabling updation of Know Your Customer details through mobile or internet banking or non-home branches.
While the accounts of beneficiaries of various central and state government schemes like direct benefit transfer and electronic benefit transfer are required to be segregated to facilitate uninterrupted credit in their accounts, the RBI found instances where even such accounts have been frozen for reasons such as pending updation or periodic updation of Know Your Customer information.
"Since these accounts mostly pertain to people from the underprivileged sections of society, the banks may facilitate the process of activation of accounts by taking an empathetic view in such cases," the RBI said in its release. "The banks may also organise special campaigns for facilitating activation of inoperative/frozen accounts. Besides, the banks may also facilitate Aadhaar updation for customers through branches providing Aadhaar-related services."
It also said the progress of banks in this regard can be monitored by the customer service committee. Banks are also advised to report the same on a quarterly basis to their respective senior supervisory manager through the DAKSH portal, starting from the quarter ending Dec. 31. End
Reported by Kshipra Petkar
Edited by Akul Nishant Akhoury and Rajeev Pai
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