RBI asks banks to activate inoperative/frozen accounts

The Reserve Bank of India (RBI) has asked banks to take urgent necessary steps to bring down the number of inoperative/ frozen accounts and make the process of activation of such accounts smoother and hassle free.

The banks have been told to enable seamless updation of KYC through mobile/internet banking, non-home branches and Video Customer Identification Process.

“While the accounts of beneficiaries of various Central/State government schemes like DBT/EBT are required to be segregated to facilitate uninterrupted credit of such DBT/EBT amounts in their accounts, instances have been observed where the accounts of such beneficiaries have been frozen due

to other factors such as pending updation/ periodic updation of KYC,” the regulator said. 

“Since these accounts mostly pertain to the people from the underprivileged sections of the society, the banks may facilitate the process of activation of accounts by taking an empathetic view in such cases. The banks may also organise special campaigns for facilitating activation of inoperative/ frozen accounts,” it added. 

Banks have been asked to facilitate Aadhaar updation for customers through the branches providing Aadhaar elated services. 

The order was issued after the RBI’s Department of Supervision which recently conducted an analysis found that the number of inoperative accounts/ unclaimed deposits in several banks was on the higher side vis-a-vis their total deposits as well as in absolute terms. 

“The reasons were attributed to either inactivity for a long time or pending updation/ periodic updation of KYC in such accounts. Reportedly, there were instances of customers facing inconvenience when they approached the bank branches for activation of inoperative accounts including inadvertent errors in customer details such as mismatch in name,” the RBI said.

“It was also observed that a few banks have a large pendency of accounts that are due for updation/ periodic updation of KYC, resulting in such accounts getting frozen for further transactions as per bank’s internal policies,” it added.