State Bank of India (SBI) has approached the Reserve Bank of India (RBI) to allow non-financial transactions, such as balance checking, to be made eligible for an account to be considered operative. The country’s largest bank has a “very limited number” of inoperative accounts, said chairman CS Setty.
“A lot of people might just be verifying the balance in his or her account, or want to be aware of their accounts. So, non-financial transactions should also be eligible for an account to be operative,” said Setty on the sidelines of an event late on Tuesday. “We have taken it up with the RBI because that will make a lot of accounts operational,” Setty said.
He said in a number of occasions, account holders, especially ones where cash transfer under government programmes is the primary usage, do limited number of financial transactions. After direct benefit transfer, the money gets credited into the account and there are at best two-three debit transactions before it becomes dormant and earns the tag of being inoperative.
When a customer does a non-financial transaction, it is a signal of he or she being aware of the bank account, and hence there is a case for tagging it as an active account, Setty said.
The comments come within days of the RBI asking banks to urgently address the issue of inoperative or frozen accounts and also start reporting progress on the same on a quarterly basis to the central bank.
Setty said SBI is using its vast network of over 22,000 branches and also business correspondents to reach out to inoperative account holders, especially where there is a mobile phone.
As per the current norms, a savings or current account is classified inoperative if there is no transaction carried out by the customer for more than two years. When an account becomes inoperative, debit transactions are not allowed without submission of fresh KYC documents.
The SBI had also started announcing a special drive on inoperative accounts over the weekend. However, the exact picture on the number of inoperative accounts is not clear.