Question: A customer's savings account had been classified as inoperative due to prolonged inactivity, During this period, the bank stopped crediting interest to the account, stating that the interest would resume only after the account was reactivated. As per the RBI Master Circular on Customer Service in Banks, 2014, was bank's decision consistent with the prescribed requirements?
Answer: No, the RBI Master Circular requires banks to continue crediting interest on savings bank accounts even if they are classified as inoperative. Interest should not be withheld merely because the account has become inoperative.

Supporting evidence:
title: rbi.org.in/72MC010714CS.pdf
quote: Interest on savings bank accounts should be credited on regular basis whether the account is operative or not
context: (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 shall not be disclosed on the bank's website. The list so published by the banks should also provide a 'Find' option to enable the public to search the list of accounts by name of the account holder.
Banks should also give on the same website, the information on the process of claiming the unclaimed deposit/activating the inoperative account and the necessary forms and documents for claiming the same. Banks are required to have adequate operational safeguards to ensure that the claimants are genuine.

24.5 Strengthening the Regulatory Framework for Uncla