MUMBAI: The Reserve Bank of India (RBI) has urged banks to take immediate measures to significantly reduce the number of inoperative accounts or frozen accounts while ensuring a smoother, hassle-free process for reactivation. Banks have been encouraged to organize dedicated campaigns to facilitate the activation of these accounts.
To streamline the process, the RBI has advised banks to enable seamless Know Your Customer (KYC) updates through various channels, including mobile and internet banking, non-home branches, and video-based customer identification processes.
Progress on this front, including the reduction of inoperative accounts and special efforts undertaken by banks, will be monitored by the Customer Service Committee (CSC) of the Board.
Banks are also required to report their progress quarterly to the respective Senior Supervisory Manager (SSM) via the DAKSH portal, the RBI’s advanced supervisory monitoring system. The first such report is due for the quarter ending December 31, 2024.
High number of accounts
The directive follows an analysis by the RBI’s Department of Supervision, which revealed that many banks have a disproportionately high number of inoperative accounts and unclaimed deposits, both in absolute terms and as a percentage of total deposits.
The central bank noted that these accounts often become inoperative accounts due to prolonged inactivity or delays in completing periodic KYC updates. Additionally, customers frequently face challenges when attempting to reactivate such accounts, including issues arising from errors in customer details, such as name mismatches.
In a circular addressed to all commercial banks, excluding regional rural banks, the RBI emphasised the importance of addressing these issues promptly to enhance customer convenience and operational efficiency.
