RBI Urges Banks to Streamline Activation of Inactive Accounts

The Reserve Bank of India has directed banks to expedite the activation of inoperative accounts and simplify the process. By organizing special campaigns and promoting Aadhaar updates, banks aim to assist underprivileged account holders and improve financial inclusion. RBI emphasizes an empathetic approach and seamless KYC processes for efficient account handling.

The Reserve Bank of India (RBI) has issued a directive to banks, urging immediate action to decrease the number of inactive or frozen accounts while ensuring a smoother activation process. To this end, the RBI has recommended that banks conduct special campaigns targeted at reactivating such accounts.

In a bid to aid account holders, particularly those from underprivileged communities, banks have also been encouraged to offer Aadhaar updating services at branches that provide related facilities. This initiative is part of a broader effort to make account reactivation more accessible. "The banks may also organize special campaigns for activating inoperative or frozen accounts," RBI announced, also recommending facilitation of Aadhaar updates at relevant branches.

The RBI has separately directed State Level Bankers' Committees (SLBCs) to actively monitor regional progress, minimizing customer inconvenience. Many of these dormant accounts are held by economically weaker sections, rendering this initiative particularly crucial. The central bank has called for banks to adopt an empathetic approach, ensuring a simplified activation process.

For accounts affected by government schemes like Direct Benefit Transfer (DBT) or Electronic Benefit Transfer (EBT) freezes due to KYC delays, the RBI has called for targeted intervention. Banks have been tasked with managing these accounts to ensure uninterrupted benefit transfers while resolving KYC issues efficiently.

These measures are part of RBI's wider strategy to enhance financial inclusion and lower access barriers for marginalized groups. With a significant year-on-year increase of 26% in unclaimed deposits, reaching Rs 78,213 crore as of March 2024, the banks have been urged to prioritize urgent action in resolving account-related issues. (ANI)

(With inputs from agencies.)