Question: A customer's savings account had already been classified as inoperative due to prolonged inactivity. When the customer visited the branch to resume using the account, the bank allowed normal transactions immediately without completing any further checks. As per the RBI Master Circular on Customer Service in Banks, 2014, was the bank's decision consistent with the prescribed requirements?
Answer: No. Before permitting normal operations, the bank should complete the required due diligence and verify the customer's identity in accordance with the prescribed procedure for reactivating an inoperative account. Only after these requirements are satisfactorily completed should the bank allow transactions in the account.

Supporting evidence:
title: rbi.org.in/72MC010714CS.pdf
quote: Operation in such accounts may be allowed after due diligence as per risk category of the customer. Due diligence would mean ensuring genuineness of the transaction, verification of the signature and identity etc
context: (viii) Further, the segregation of the inoperative accounts is from the point of view of reducing risk of frauds etc. However, the customer should not be inconvenienced in any way, just because his account has been rendered inoperative. The classification is there only to bring to the attention of dealing staff, the increased risk in the account. The transaction may be monitored at a higher level both from the point of view of preventing fraud and making a Suspicious Transactions Report. However, the entire process should remain un-noticeable by the customer.
(ix) Operation in such accounts may be allowed after due diligence as per risk category of the customer. Due diligence would mean ensuring genuineness of the transaction, verification of the signature and identity etc. However, it has to be ensured that the customer is not inconvenienced as a result of extra care taken by the bank.
(x) There should not be any charge for activation of inoperative account.
- (xi) Banks are also advised to ensure that the amounts lying in inoperative accounts ledger are properly audited by the internal auditors / statutory auditors of the bank.
(xii) Interest on savings bank accounts should be credited on regular basis whether the account is operative or not. If a Fixed Deposit Receipt matures and proceeds are unpaid, the amount left unclaimed with the bank will attract savings bank rate of interest.

24. Unclaimed Deposits / Inoperative Accounts in banks

- 24.3 Banks may also consider launching a special drive for finding the whereabouts of the customers / legal heirs in respect of existing accounts which have already been transferred to the separate ledger of 'inoperative accounts'.
- 24.4 Display list of Inoperative Accounts: Banks should, in addition to the instructions contained above, play a more pro-active role in finding the whereabouts of
the accountholders of unclaimed deposits/ inoperative accounts. Banks are, therefore, advised that they should display the list of unclaimed deposits/inoperative accounts which are inactive / inoperative for ten years or more on their respective websites. The list so displayed on the websites must contain only the names of the account holder(s) and his/her address in respect of unclaimed deposits/inoperative accounts. In case such accounts are not in the name of individuals, the names of individuals authorized to operate the accounts should also be indicated. However, the account number, its type and the name of the branch sh