The rules for deactivating bank accounts may soon undergo changes.
State Bank of India (SBI), the country’s largest public sector bank, has suggested modifications to the Reserve Bank of India (RBI).
To address challenges in keeping accounts active, SBI has proposed that non-financial transactions, such as balance inquiries, be considered to classify an account as active.
SBI Highlights Issues with Current Rules
SBI Chairman C.S. Shetty pointed out that many account holders, especially those who open accounts for government financial aid, make very few transactions.
Typically, after funds are deposited into such accounts, only two or three withdrawals are made, and the accounts then become inactive and are classified as dormant.
Shetty emphasized that the current rules focus solely on financial transactions over a specific period. As a result, numerous accounts are marked as ‘inactive.’
He proposed that performing non-financial transactions, like balance checks, demonstrates the account holder’s awareness and should keep the account active.
RBI’s Directive and SBI’s Campaign
The RBI recently instructed banks to promptly address issues related to inactive or frozen accounts and report their progress quarterly.
In response, SBI launched a special campaign over the weekend to deal with inactive accounts. However, the exact number of such accounts within SBI remains undisclosed.
What is a Dormant Account?
A dormant or deactivated account is one where no transactions occur for an extended period.
Once an account is marked dormant, the account holder cannot withdraw or deposit money until it is reactivated.
This typically happens when an account remains unused and no funds are deposited into it for a long time.
