Lok Sabha Question No. 5205 (UNSTARRED), answered on 2022-04-04
Subject: Inoperative Savings Accounts
Ministry: FINANCE
Asked by: Rakesh Singh

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA

## UNSTARRED QUESTION NO. 5205

TO BE ANSWERED ON MONDAY, 4 th  APRIL, 2022/ CHAITRA 14, 1944 (SAKA)

## INOPERATIVE SAVINGS ACCOUNTS

## †5205. SHRI RAKESH SINGH:

Will the Minister of FINANCE be pleased to state:

- a) whether  the  savings  accounts  have  been  made  inoperative  without  any  intimation  to  the customers by the banks in the country including the Indian Overseas Bank, Jabalpur due to non-transactions during Covid period, if so, the details thereof;
- b) whether the interest amount has been credited in these savings accounts by the banks during the said period, if so, the details thereof and if not, the reasons therefor;
- c) whether  inoperative  charges  have  also  been  levied  on  such  savings  accounts,  if  so,  the details  thereof  and  the  reasons  for  making  these  savings  accounts  inoperative  despite  a 'system generated' transaction;
- d) whether there are rules in existence for banks in this regard but these rules have not been followed, if so, the details thereof during the last three years; and
- e) whether  the  Government  proposes  to  take  any  action  in  this  regard  and  if  so,  the  details thereof?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (DR. BHAGWAT KARAD)

(a): As per the  instructions  issued  by  the  Reserve  Bank  of  India  (RBI)  to  banks  vide  their  Master Circular dated 01.07.2015 on 'Customer Service in Banks', banks are required to make an annual review of  accounts in which there are no operations for more than one year, and to approach the customers and inform them in writing that there has been no operation in their accounts and ascertain the  reasons  for  the  same.  Further,  banks  are  required  to  display  the  list  of  unclaimed  deposits/ inoperative  accounts  which  are  inactive  /  inoperative  for  ten  years  or  more  on  their  respective websites. Banks have also been advised to play a more pro-active role in finding the whereabouts of account  holders  whose  accounts  have  remained  inoperative,  vide  circulars  dated  07.02.2012, 08.02.2012, 21.11.2014 and 02.02.2015.

The Indian Overseas Bank (IOB) has also informed that intimation to their customers by way of SMS is provided when the accounts are not in operation for more than 1 year and a second intimation is given by way of SMS if the account is not in operation for more than 2 years.

Further,  in  respect  of  Pradhan  Mantri  Jan-Dhan  Yojana  (PMJDY)  Accounts/  Basic  Savings  Bank Deposit (BSBD) Accounts/ Small Accounts holders, whose accounts had become inoperational due to ceasing of operations of accounts or suspension of transactions in the account for want of noncompletion of KYC requirements / KYC updation, and considering the extraordinary circumstances of restrictions  due  to  COVID-19  pandemic  and  to  avoid  any  difficulties  for  small  account  holders  in undertaking  transactions  through  small  accounts,  the  Government  had  issued  a  Notification  dated 31.03.2020 to amend the Prevention of Money Laundering (Maintenance of Records) Rules, 2005

and  provide  that  Small  Accounts  shall  remain  operational  between  01.04.2020  and  30.06.2020, thereby  providing  reprieve  to  account  holders  who  could  have  been  adversely  affected  due  to  the KYC requirements.  The  Government  subsequently  extended  the  period  for  which  Small  Accounts were to remain operational till 31.12.2021.

(b): Banks  credit  interest  to  savings  accounts  in  terms  of  RBI's  Master  Circular  dated  01.07.2015, which states that interest on savings bank accounts has to be credited on regular basis, whether the account is operative or not.

(c) to (e) : In terms of RBI's Master Circular dated 01.07.2015 ibid, banks are not to levy any charge for activation of inoperative accounts. Further, the Master Circular also provides that for the purpose of  classifying  an  account  as  'inoperative'  both  the  type  of  transactions  i.e.,  debit  as  well  as  credit transactions  induced  at  the  instance  of  customers  as  well  as  third  party  should  be  considered. However,  the  service  charges  levied  by  the  bank  or  interest  credited  by  the  bank  should  not  be considered.

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