RBI releases comprehensive guidelines for bank handling of unclaimed deposits

In a bid to streamline and ensure transparency in managing unclaimed deposits, the Reserve Bank of India (RBI) unveiled detailed guidelines mandating specific measures for banks when classifying accounts and deposits as inoperative.

The new guidelines stress the importance of periodic reviews of accounts and deposits, implementing anti-fraud measures, establishing an efficient grievance redressal mechanism, and taking necessary steps to trace customers, including nominees or legal heirs, associated with inoperative accounts for potential reactivation or closure.

This initiative follows the RBI's "100 Days 100 Pays" campaign launched last year, compelling banks to identify and settle the top 100 unclaimed deposits in each district. Initially set to conclude on September 8, the deadline for the campaign has been extended to April 1, 2024.

Under these fresh directives, banks are required to conduct an annual review of accounts devoid of customer-initiated transactions for over a year. Additionally, if term deposits aren't explicitly mandated for renewal and customers fail to withdraw proceeds post-maturity or transfer them to their other accounts, banks must review these accounts to prevent them from lapsing into unclaimed status.

Moreover, the RBI specified that zero-balance accounts won't be labeled as 'inoperative' if they remain non-operational for up to two years. This decision was prompted by challenges faced by governments in depositing funds, such as Direct Benefit Transfers or scholarship amounts, into these accounts due to their inoperative status.

To ensure accountability, banks must subject reactivated amounts from inoperative accounts to concurrent audits. Transactions within these reactivated accounts will be closely monitored, without the knowledge of customers and dealing staff, for at least six months at higher administrative levels.

Accounts left inactive for 10 years for savings/current accounts and unclaimed term deposits post-maturity are categorized as unclaimed deposits by banks. These funds are subsequently transferred to the Depositor Education and Awareness (DEA) fund maintained by the RBI.

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