Winning Bizness Desk

Rs 1 Lakh Crore trapped in Dormant Bank Accounts: RBI Plans Crackdown to Mitigate Risks

Mumbai. The Reserve Bank of India (RBI) has expressed concerns over the growing number of frozen and inoperative bank accounts, which pose risks of fraud and financial misuse. To tackle this issue, the central bank has directed financial institutions to take immediate measures to reduce dormant accounts. It has also urged banks to simplify the KYC process through mobile or internet banking, non-home branches, and video-based customer identification systems. Additionally, the RBI has instructed banks to ensure that funds from various central and state government schemes can be seamlessly deposited into these accounts. Any account with no transactions for over two years is categorized as inactive.

Alarming Growth in Unclaimed Deposits

By the end of 2023, dormant accounts had accumulated over Rs 1 lakh crore, including Rs 42,000 crore in unclaimed deposits. According to government data, unclaimed deposits rose 28% annually, reaching Rs 42,270 crore in March 2023 compared to Rs 32,934 crore in March 2022. Of this, private banks account for Rs 6,087 crore. To address this, the RBI has advised banks to release quarterly reports on inoperative accounts and to increase vigilance to prevent fraud.

Why Dormant Accounts Are Risky

Dormant accounts are increasingly being targeted for fraudulent activities, including unauthorized transactions and identity theft. According to experts, these accounts are often exploited for scams or money laundering. An expert added that dormant accounts can facilitate illegal transfers or conceal transactions. Immediate withdrawals post-transfers make these accounts ideal for unlawful operations.

Cyber Fraud on the Rise

The Home Ministry reported that cyber fraud caused a loss of Rs 11,333 crore in the first nine months of 2024 alone. Nearly 20% of the country’s Jan Dhan accounts were inactive by December 2023, amounting to 10.3 crore accounts out of a total of 51 crore.

Dormant Accounts: Key Points for Account Holders

Charges: Maintenance or inactivity fees may apply.

Access Restrictions: Account holders may lose access to online banking or services like new debit card issuance.

Fund Utilization: Unclaimed deposits can be transferred to an RBI-managed education and awareness fund.

How to Reactivate a Dormant Account

Reactivating a dormant account is a free process under RBI guidelines. Here’s how:

• Visit the Bank Branch: Fill out a KYC form with your signature.
• Submit Documents: Provide a self-attested ID proof and address verification.
• Make a Transaction: Deposit a minimum of Rs 100 to activate the account.

RBI’s Vigilance and Increased Public Interest

The RBI’s recent directives on dormant accounts have drawn significant public attention. Google Trends data shows a notable increase in searches related to this topic over the last 30 days, reflecting growing awareness and curiosity among account holders.