RBI Circular

RBI’s Initiative on Inoperative Accounts & Unclaimed Deposits

RBI’s Initiative on Inoperative Accounts & Unclaimed Deposits

The RBI aims to guide the account holders and enhance the management of their inoperative accounts and unclaimed deposits, so the revised guidelines consolidate present instructions by covering various aspects, including classifications of accounts, periodic reviews, prevention of fraud, grievous redressal and guide to tracing customer for re-activating or settling their claims. The revised instructions will come into effect from April 1, 2024.

Key Highlights of RBI’s Guideline dated January, 1st 2024

As per the existing instructions, any credit balance in a deposit account maintained with a bank, which has been not operated upon for ten years or more, or any amount remaining unclaimed for ten years or more, as mentioned in paragraph 3(iii) of the Depositor Education and Awareness (DEA) Fund Scheme, 2014, must be transferred by the bank to the DEA Fund maintained by the Reserve Bank of India. The RBI has directed banks to contact the holder(s) of the inoperative account/unclaimed deposit through letters, email or SMS on the registered mobile number or email ID. The email or SMS shall be sent every quarter. As per the Central Bank’s circular, banks must undertake special drives periodically to find out the whereabouts of customers, their nominees or legal heirs regarding inoperative accounts/unclaimed deposits. The RBI has further instructed banks that amounts in inoperative accounts/unclaimed deposits and re-activated inoperative accounts/unclaimed deposits are subjected to concurrent audit. The RBI has directed banks to ensure that no charges must be levied to re-activate inoperative accounts. Concerning the interest on savings accounts, the RBI has clearly instructed that interest on savings accounts shall be credited regularly, irrespective of whether the account is in operation. The revised instructions will come into effect from April 1, 2024.

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Brief about Inoperative Accounts and Unclaimed Deposits

The recent guidelines on RBI have made changes in inoperative accounts and unclaimed deposits in banks. The circular addresses key aspects of managing dormant accounts, including customer-induced transactions, fraud prevention, and a streamlined process for reactivation or closure.

Inoperative Account

An account is considered inoperative if there have been no customer-induced transactions for over two years, so it shall be treated as an inoperative account.

Unclaimed Deposits

The balance in any deposit account that remains unclaimed for ten years or more will be transferred to the Depositor Education and Awareness fund maintained by the RBI, as mentioned in paragraph 3(iii) of the Depositor Education and Awareness Fund Scheme, 2014.

Customer induced transaction

The account transactions may include financial transactions initiated by the account holder or carried out on their behalf by the bank or a third party. Additionally, non-financial transactions and KYC1 updates can be performed through face-to-face interactions, physical modes or digital channels such as Internet banking or mobile banking applications.

Regulation on Inoperative Accounts and Unclaimed Deposits

The Reserve Bank of India released new guidelines on January 1st, 2024, regarding regulations for Inoperative Accounts and unclaimed deposits. These guidelines include the following key points:-

  1. The banks are required to review accounts without any customer-induced transactions for over a year on an annual basis.
  2. The customers will be notified through letters, emails, or SMS about the lack of activity in their accounts. They will also receive warnings about the possible classification of their accounts as ‘inoperative’.
  3. The accounts created for the credit of scholarship amounts and Direct Benefit transfers under government schemes will be treated differently to prevent them from being classified as ‘inoperative’.
  4. The Inoperative accounts will be separated to minimize the risk of fraud.
  5. The inoperative accounts will be closely monitored for at least six months after reactivation.
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Role of Bank in Inoperative Accounts and Unclaimed Deposits

The following are the roles of a bank when dealing with inoperative accounts and unclaimed deposits:-

  1. The banks will make active efforts to locate account holders through various means such as letters, emails, and SMS.
  2. The banks are required to conduct an annual review of accounts, specifically those that have had no customer-initiated transactions for more than a year.
  3. The special drives will be conducted periodically to locate customers, nominees, or legal heirs of inoperative accounts.
  4. The banks will assist in updating KYC (Know Your Customer) details to activate inoperative accounts. This can be done through physical branches or the Video-Customer Identification Process.
  5. The activation of an inoperative account will require a second level of authorization, and automatic intimation will be sent to the account holder.

Scenarios of Interest and Charges in Inoperative Accounts and Unclaimed Deposits

The interest and charges on inoperative accounts and unclaimed deposits work similarly to those of active accounts. Below are some scenarios related to interest on inoperative accounts and unclaimed deposits:-

  1. Interest on savings accounts will be credited regularly, regardless of account activity.
  2. There will be no penal charges for non-maintenance of minimum balances in inoperative accounts.
  3. There will also be no charges for the activation of inoperative accounts.

Fraud Risk Management

The debit transactions can’t be made in inoperative accounts unless the customer activates the account. Measures will be in place to prevent unauthorized access and data theft. The guidelines make it clear that debit transactions in inoperative accounts are prohibited unless a customer activation occurs. Account holders must play an active role in re-activating their dormant accounts. Banks are advised to consider a cooling-off period upon reactivation. It’s a precautionary measure that restricts the number and amounts of transactions, similar to newly opened accounts. This step is taken to safeguard against potential fraudulent activities or misuse.

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Customer Awareness

Banks will provide information on their websites and at their branches about how to activate inoperative accounts and claim unclaimed deposits. Regular public awareness and financial literacy campaigns will be conducted to educate people about these processes. These guidelines will come into effect from April 1, 2024, and aim to put customers first, prevent fraud, and ensure efficient operational procedures. Banks are encouraged to implement these measures to reduce the number of unclaimed deposits in the banking system and to ensure that the rightful owners or claimants receive prompt access to their funds.


The RBI guideline’s main aim is to balance the need for operational flexibility with the imperative to prevent fraud and misuse by ensuring the continued effectiveness of the crucial financial instruments as an initiative by the government.



  1. https://en.wikipedia.org/wiki/Know_your_customer

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