Indian banks told to bring down number of inoperative, frozen accounts

Many of these result from banks’ backlog in their period verification of bank accounts.

India’s central bank has advised banks to bring down the number of inoperative and frozen accounts, noting that a number of those affected are owned by people from underprivileged backgrounds.

In a statement, the Reserve Bank of India (RBI) urged banks to make use of digital and online tools– such as mobile and internet banking– in updating and verifying customer details.

The central bank urged banks to take an empathetic view in facilitating the process of activation of accounts in such cases.

A recent analysis by the Reserve Bank of India (RBI) found a high number of inoperative accounts and unclaimed deposits in several banks.

RBI also noted instances where customers are inconvenienced when they approach a bank to reactive inoperative accounts. Problems included errors in customer details including mismatch in name.

Some accounts are getting frozen due to banks having “a large pendency of accounts due for updation [or] periodic updation of KYC” or banks having a backlog in verifying customers details.

RBI also advised banks to organise special campaigns for facilitating activation of inoperative/ frozen accounts.

It also suggested that banks facilitate Aadhaar updation for customers through the branches providing Aadhaar related services.