The Reserve Bank of India (RBI) has expressed concern over the growing number of freezes and dormant accounts in banks. Banks have been instructed to take all necessary steps immediately possible to reduce such accounts. Banks have been asked to adopt simple procedures like mobile or internet banking, non-home branches, video customer identification for KYC of such accounts.
Along with this, it has also been asked to ensure that the amount coming into such accounts through various schemes of the Central or State Governments continues to be deposited without any problem. An account in which no transactions have taken place for more than two years is classified as a dormant account.
Unclaimed deposits increased by 28% year-on-year RBI has advised banks to issue reports on dormant accounts on a quarterly basis. Earlier, RBI had instructed banks to increase vigilance to prevent fraud from such accounts. According to government data, more than Rs 1 lakh crore was trapped in such accounts by the end of 2023. About 42 thousand crores of rupees are unclaimed.
In December 2023, the Finance Ministry informed Parliament that unclaimed deposits in banks increased by 28% year-on-year to Rs 42,270 crore in March 2023, from Rs 32,934 crore in March 2022. Out of this Rs. 6,087 crore are in private banks.
Dormant Account: All You Need to Know
Why has RBI given instructions to monitor dormant accounts? The RBI had instructed banks to monitor reactivated accounts for six months to reduce the risk of fraud from such accounts. Also instructions were given to monitor the accounts which have been inactive for one year.
How are inactive accounts increasing the risk of fraud? According to Ketan Mukhija, senior partner at Bergian Law, these accounts are often targeted for scams and identity theft. Bank employees can misuse these accounts for unauthorized transactions.
How can inactive accounts promote illegal activities? According to Vikram Babbar, partner at EY Forensic and Integrity Services, illicit money can be channeled into these accounts. An instant withdrawal may be made to erase the transaction. This becomes an ideal medium for illegal operations.
11 thousand crore fraud in 9 months According to the Ministry of Home Affairs, India has lost Rs 11,333 crore due to cyber fraud in the first nine months of 2024. By December 2023, about 20% of Jandhan accounts were inactive. This means that out of a total of 51 crore Jandhan accounts, about 10.3 crore accounts were inactive.
Note: Interest can be withheld on dormant accounts, RBI can invest money in welfare
- Reactivating an account not only helps in financial inclusion, but also keeps the deposited amount safe. Account holders can transact without any hassle.
- Inactive accounts may be subject to maintenance or inactivity fees. Account holders lose access to services such as online banking or requesting a new debit card. Interest may also be discontinued.
- Unclaimed deposits are remitted to the Education and Awareness Fund managed by the RBI.
How to Activate Account: This process is free, account can be activated with a transaction of ₹100.
- As per RBI guidelines, banks cannot charge any fee for opening a non-operative account. That means the account activation process is completely free.
- Such account holders should visit the branch and fill the KYC form with their signature to activate the account.
- Provide self-attested identity card and home address along with the form.
- Enter an amount to activate the account. Account can be activated with minimum transaction of Rs.100.
Bank Trending on Google RBI has expressed concern over the growing number of freezes and non-operative accounts in banks. After this news, the bank is being continuously searched on Google. If we look at the Google trends of the last 30 days, it is clear that the search graph for banks has increased.
Reference- GOOGLE TRENDS
Image Credit: (Divya-Bhaskar): Images/graphics belong to (Divya-Bhaskar).
