RBI asks banks to allot different product code to dormant accounts

Sep 17 2013, 22:04 IST
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SummaryThe Reserve Bank today advised banks to allot a different product code in their core banking solution to accounts that were dormant or inoperative for over two years

The Reserve Bank today advised banks to allot a different product code in their core banking solution to accounts that were dormant or inoperative for over two years as central and state governments were facing difficulties to transfer social benefits in such accounts.

State and central governments have expressed difficulties in crediting cheques/Direct Benefit Transfer/Electronic Benefit Transfer/scholarships for students, Zero Balance Accounts, into accounts opened for the beneficiaries under various central/state government schemes but had been classified as dormant/inoperative due to non-operation of the account for over two years, RBI said in a notification.

"...banks are advised that they may allot a different 'product code' in their CBS to all such accounts opened by banks so that the stipulation of inoperative/dormant account due to non-operation does not apply while crediting proceeds," it said.

RBI further said that to allow operations in such accounts, due diligence should be exercised to ensure genuineness of transactions, verification of signature and identity to reduce the risk of fraud.

"However, it has to be ensured that the customer is not inconvenienced in any manner," it added.

As per RBI directive, banks have been advised that a savings or current account should be treated as inoperative/ dormant if there are no transactions in the account for over a period of two years.

It has also asked banks to adopt safeguards while dealing with such accounts.

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