No minimum balance charges on ‘inoperative accounts’: RBI
RBI directs lenders to disclose all loan fees upfront to customers
Reserve Bank of India said that banks are not allowed to charge customers for failing to keep an account’s minimum balance on inactive accounts—those that haven’t had a transaction for more than two years. Furthermore, even if an account hasn’t been used for more than two years, banks are not allowed to declare it inactive if it was opened to receive direct benefit transfers or scholarship funds.
The RBI’s new circular on inoperative accounts includes the instructions to banks, which are a part of the RBI’s efforts to reduce the amount of unclaimed bank deposits.
The amended regulations take effect on April 1.
According to the Reserve Bank of India, these guidelines are anticipated to supplement the continuous efforts and measures implemented by banks and the RBI to lower the amount of unclaimed deposits in the banking system and return such deposits to their legitimate owners or claimants.
The new regulations require banks to notify clients via email, SMS, or letter when their accounts become inactive. In the event that the owner of an inactive account does not reply, banks have also been asked to get in touch with the account holder’s nominees or the person who first introduced them.
RBI further said that banks are not allowed to charge penalties to customers for failing to maintain minimum balances in any accounts that are labeled as inactive. There won’t be any fees associated with activating inactive accounts.
Unclaimed deposits increased by 28% to Rs 42,272 crore at the end of March 2023 from Rs 32,934 crore the previous year, according to a recent RBI report. Banks are required to transfer any remaining balances in deposit accounts that have not been used for ten years or longer to the RBI’s Depositor and Education Awareness Fund.
The RBI has previously instructed banks to make sure that account balances do not go negative as a result of penalty fees for failing to maintain minimum balances. There have been cases where banks have applied penalties in spite of this.
