No minimum balance charges on 'inoperative accounts': Reserve Bank of India
Mumbai, Jan 3, 2024
The RBI has said that banks cannot impose a penalty for not maintaining minimum balance on accounts that are inoperative - those that have not recorded any transaction for over two years. It also added that banks cannot classify accounts created for receiving scholarship money or direct benefit transfers as inoperative even if they have not been used for over two years.
The directive to banks are a part of RBI's new circular on inoperative accounts - and part of its efforts to bring down the level of unclaimed bank deposits.
The new rules come into effect from April 1.
"These instructions are expected to complement the ongoing efforts and initiatives taken by banks and RBI to reduce the quantum of unclaimed deposits in the banking system and return such deposits to their rightful owners/claimants," RBI said in its circular.
Under the new rules, banks have to inform customers through SMS, letters or email of their accounts turning inoperative. Banks have also been asked to reach out to the person who introduced the account holder or the account holder's nominees in case the owner of an inoperative account does not respond.
"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," the rules said. According to a recent RBI report, unclaimed deposits rose 28% to Rs 42,272 crore as of end March 2023 from Rs 32,934 crore a year ago. Any balance in deposit accounts, which have not been operated upon for 10 years or more, are required to be transferred by banks to Depositor and Education Awareness Fund maintained by RBI.
In the past, RBI had directed banks to ensure that balances in accounts do not turn negative because of imposition of penalty charges for not maintaining minimum balances. Despite this, there have been instances of banks continuing to impose penal charges.
[The Times of India]
