In a significant move to streamline dormant accounts and unclaimed deposits, the Reserve Bank of India (RBI) has announced revised instructions that will take effect from April 1, 2024. The central bank's circular specifies that banks must transfer the credit balance in any deposit account inactive for ten years or more, or any unclaimed amount lingering for a decade or more, to the RBI's Depositor Education and Awareness (DEA) Fund.
The circular, applicable to all Commercial Banks, including Regional Rural Banks (RRBs), and Co-operative Banks, underscores the need for a comprehensive approach. It emphasizes the importance of periodic reviews for classifying accounts and deposits as inoperative or unclaimed, implementing measures to prevent fraud, and establishing a robust grievance redressal mechanism for swift complaint resolution.
The RBI's decision stems from a thorough review conducted in consultation with various stakeholders. The aim is not only to assist account holders but also to consolidate and rationalize existing guidelines on inoperative accounts. The forthcoming guidelines will cover diverse aspects, including steps to trace customers of dormant accounts, their nominees, and legal heirs for reactivation, settlement of claims, or closure.
The central bank emphasizes that the new instructions are designed to complement ongoing efforts by banks and the RBI to reduce the volume of unclaimed deposits within the banking system. The overarching goal is to ensure that these dormant funds are returned promptly to their rightful owners or claimants.
As the banking landscape evolves, the RBI's proactive stance seeks to strike a balance between safeguarding consumer interests and maintaining the integrity of financial systems. Come April 1, a new chapter in banking regulations will unfold, ushering in a more streamlined and accountable approach to dormant accounts and unclaimed deposits.
