banking Sector regulator Reserve Bank of India (RBI) has ordered banks to reduce the number of inactive or frozen accounts. RBI has said that banks should streamline and simplify the process of verification of such accounts by updating KYC of customers through mobile or internet banking, non-home branch, video customer identification process.
Run special campaigns to activate dormant-deposit accounts
RBI said in its order, for this update, beneficiaries of central and state government schemes like DBT or EBT should be kept separate from this entire process to maintain the facility of seamless transaction of DBT-EBT amount in their accounts. According to RBI, such cases have been seen in which the accounts of the beneficiaries have been frozen due to lack of KYC. According to RBI, such accounts mostly belong to people from deprived sections of the society, hence banks should adopt a sympathetic approach in such cases and simplify the process of activating the accounts. RBI has asked banks to run a special drive to activate inactive or frozen accounts. Apart from this, banks have been asked to provide the facility of Aadhaar updation to the customers through the branches providing Aadhaar related services.
RBI will keep an eye on the efforts of banks
RBI has clearly told the banks that the Customer Service Committee of the RBI Board will monitor efforts to reduce the number of inactive accounts or frozen accounts. Also, banks will have to submit reports to their senior supervisory managers through the Daksh portal on a quarterly basis from December 31, 2024.
Huge problem in KYC update
In its notification issued in this regard, RBI said, the regulatory monitoring department has conducted an analysis which found that the deposits in inactive or unclaimed accounts are more than the total deposits in banks. The main reasons for this include no transactions in bank accounts for a long time and pending KYC updates in such accounts. According to the monitoring department of RBI, many such cases have come to light when people approach the bank to activate dormant accounts, then they have to face a lot of trouble. RBI in its investigation found that a large number of such accounts are pending in some banks whose KYC is yet to be updated, due to which banks have been prohibited from doing any transaction in such accounts as per their policy.
