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Inoperative Accounts / Unclaimed Deposits in Banks

Reserve Bank of India (RBI) has issued revised instructions on inoperative accounts / unclaimed deposits in the banks.

What is inoperative account and unclaimed deposit?

  • Inoperative account – A savings / current account shall be treated as inoperative, if there are no ‘customer induced transactions’ in the account for a period of over 2 years.
  • Unclaimed deposit – The credit balance in any deposit account maintained with banks, which have not been operated upon for 10 years or more, or any amount remaining unclaimed for 10 years or more.

What are financial and non-financial transactions?

  • Financial transaction – A monetary transaction in the savings / current account of the customer with the bank either by way of a credit or debit transaction.
  • Non-financial transaction – An enquiry or request for any product / service initiated by the account holder through any ATM / internet banking / mobile banking application of the bank or through Third Party Application Providers, or successful log-in to the internet banking / mobile banking application. For eg. change in transaction limit, request for issue of cheque book / credit card / debit card, nomination facility, balance enquiry, etc.

What are bank induced and customer induced transactions?

  • Bank induced transaction – Transactions in the account initiated by the bank such as charges, fees, interest payments, penalties, taxes.
  • Customer induced transaction – The transactions in account which are in the nature of –
    • Financial transaction initiated by or done at the behest of the account holder by the bank / third party.
    • Non-financial transaction.
    • KYC updation done in face-to-face physical mode or through digital channels such as internet banking or mobile banking application of the bank.

What is Unclaimed Deposit Reference Number (UDRN)?

Unclaimed Deposit Reference Number (UDRN) is a unique number assigned to each unclaimed account / deposit transferred to Depositor Education and Awareness (DEA) Fund of Reserve Bank of India (RBI). 

When and how shall banks review the accounts?

  • Banks shall undertake at least an annual review of accounts, where there is no customer induced transactions for more than a year. 
  • In cases where there is no explicit mandate to renew the term deposit, the banks should review such accounts if the customers have not withdrawn the proceeds after maturity or transferred these to their savings / current account. 
  • The banks shall inform the account / deposit holders in writing through letters / email / SMS that there has been no operation in their accounts / deposits in the last one year. The alert messages shall invariably mention that the account would become ‘inoperative’ if no operations are carried out during the next one year and, the account holder would be required to submit KYC documents afresh for reactivating the account.
  • If the letters are returned undelivered or no response is received, the bank shall immediately undertake an enquiry to find out the whereabouts of account holder or his / her nominee / legal heirs in case the account holder is deceased.
  • In case any response is received from the account holder giving the reasons for not operating the account, the banks shall continue to classify the account as operative for one more year and the account holder shall be advised to operate the account within the extended period of one year. In case the account holder still fails to operate the account, the banks shall classify the account as inoperative account after the expiry of the extended period.
  • In case the account holder is not carrying out transaction and the account is inoperative due to shifting of primary account to another bank, the account holder may be requested to provide the details of the new bank account with authorisation to enable the bank to transfer the balance from the existing bank account.
  • In case a customer is maintaining multiple accounts / deposits with a bank, all such accounts / deposits shall be assessed individually for the purpose of classifying them as inoperative account / unclaimed deposit.

What if accounts are opened for credit of scholarship / DBT?

The banks open zero balance accounts for beneficiaries of Central / State government schemes for credit of Direct Benefit Transfer (DBT) and for students who receive scholarship. These accounts shall not be classified as ‘inoperative’ even when they are not operated for more than 2 years. 

What are the instructions on activation of inoperative accounts?

  • The banks shall activate the inoperative accounts / unclaimed deposits, including those which are under freeze by orders of various agencies like Courts, Tribunals, Law Enforcement Agencies, only after updation of KYC. 
  • The bank shall automatically intimate the inoperative account / unclaimed deposit holders though SMS and registered email stating that on the basis of the KYC documents submitted by them, the inoperative status of the account has been removed. The intimation shall also mention the remedial measures available to them to report unauthorised access, if any. 
  • The banks shall process requests for activation of inoperative account / unclaimed deposits within 3 working days from the receipt of the complete application.
  • The transactions in inoperative accounts, which have been reactivated, shall be monitored regularly, for at least 6 months, at higher levels (i.e. by controlling authorities of the concerned branch) without the knowledge and notice of the customers and the dealing staff.

What are the instructions on interest / fees on inoperative accounts?

  • Interest on savings accounts shall be credited on a regular basis irrespective of the fact that the account is in operation or not.
  • The banks are not permitted to levy penal charges for non-maintenance of minimum balances in any account that is classified as an inoperative account.
  • No charges shall be levied for activation of inoperative accounts.

What are the instructions on search facility for unclaimed deposits?

  • Banks shall host the details of unclaimed deposits [only name, address (without pin code) and UDRN], which have been transferred to DEA Fund of RBI on their respective websites, which shall be updated at least on a monthly basis, and shall have a search option to enable the public to search for their unclaimed deposits.
  • The banks, which do not have their own websites shall make available the list of unclaimed deposits in their respective branches. 

From when shall the revised instructions be applicable?

The revised instructions shall come into effect from April 1, 2024.

What is UDGAM?

RBI has launched a Centralised Web Portal - UDGAM (Unclaimed Deposits – Gateway to Access inforMation) to facilitate and make it easier for the public to search their unclaimed deposits across multiple banks at one place. The portal also enables them to either claim the deposit amount or make their deposit accounts operative at their respective banks. 

Reserve Bank Information Technology Pvt Ltd (ReBIT), Indian Financial Technology & Allied Services (IFTAS) and participating banks have collaborated on developing the portal.

The search facility was initially made available on the portal for 7 banks (State Bank of India, Punjab National Bank, Central Bank of India, Dhanlaxmi Bank Ltd., South Indian Bank Ltd., DBS Bank India Ltd., Citibank N.A.) and for remaining banks it was planned to be made available in a phased manner by October 15, 2023. The search facility for 30 banks has been made available on the portal on September 28, 2023, which covers around 90% of such unclaimed deposits (in value terms) in Depositor Education and Awareness (DEA) Fund.


References

Reserve Bank of India. (2023, October 05). 'Onboarding of more banks on उद्गम UDGAM portal'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=56498

Reserve Bank of India. (2023, August 17). 'RBI launches उद्गम - UDGAM - Centralised Web Portal for searching Unclaimed Deposits'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=56216

Reserve Bank of India. (2024, March 05). 'FAQ - UDGAM Portal'. Retrieved from https://www.rbi.org.in/Scripts/FAQView.aspx?Id=166

Reserve Bank of India. (2024, January 01). 'Inoperative Accounts /Unclaimed Deposits in Banks- Revised Instructions'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12589&Mode=0


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