Inactive Bank Account Update: To address the challenge of keeping bank accounts active, the State Bank of India (SBI) has written to the Reserve Bank of India (RBI) requesting a change in the rules. SBI has suggested that non-financial transactions, such as balance inquiries, should be considered sufficient to classify an account as active. C.S. Shetty, chairman of SBI, stated that many account holders, especially those who opened accounts to receive financial assistance under government programs, often perform only a limited number of transactions.
Issue Raised Before RBI
Shetty mentioned on the sidelines of a bank event late Tuesday evening that after money is deposited into an account, typically only two or three withdrawals are made. After this, the account becomes inactive and is classified as dormant. He added that the account could be reactivated through non-financial transactions, stating, “We have raised this matter before the Reserve Bank of India (RBI).”
Non-Financial Transactions Are Also Important
The SBI chairman explained that the current rules focus primarily on financial transactions within a specific time frame, which leads to many accounts being marked as “inactive.” He emphasized that when a customer performs a non-financial transaction, it shows they are still “aware” of their bank account, and as such, it should be considered an active account.
Special Drive Against Dormant Accounts
The chairman’s statement comes shortly after the RBI instructed banks to resolve the issue of dormant or ‘frozen’ accounts and report their progress to the central bank on a quarterly basis. Over the weekend, SBI also launched a special drive aimed at addressing dormant accounts. However, the exact number of dormant accounts at the country’s largest bank remains unavailable.
General Rules for Inactive Accounts:
Most banks in India, as per RBI guidelines, classify accounts as inactive if there are no financial transactions for a specified period, typically 12 months. Accounts that remain inactive for 24 months are marked as dormant.
Steps to Reactivate an Inactive Bank Account
- Visit Branch: Go to your home branch with valid ID proof (Aadhaar, PAN, etc.).
- Submit Application: Fill out the reactivation form or submit a written request.
- Update KYC: Provide updated KYC documents (ID proof, address proof).
- Make a Transaction: Deposit, withdraw, or transfer funds to activate the account.
- Confirm Reactivation: Ensure the account is marked active after the process.