Monday, July 19, 2010

RBI says, banks cannot declare your account ‘inoperative’

Many of us don’t know about norms which have been formulated by the Reserve Bank of India (RBI) to protect our interest and rights which bank tend to flout. One of the norms is on ‘inoperative accounts’.

If you have not operated your bank account for a long time there is every possibility of your bank to flout the instructions given by RBI and declare your account as ‘inoperative’ without giving you any notice and even dishonoring your cheques issued on that account.

To protect your interests, you must know what exactly the regulator says, firstly, RBI says an account (both savings and current) can be treated as ‘inoperative account’ or ‘dormant’ only if there are no customer-induced transactions in the account for more than two years.

It also states that if interest from a fixed deposit is being credited into the account, then it should be considered as customer –induced transaction and should not be considered as a dormant account.

More important, the RBI circular issued on August 22, 2008 related to “Unclaimed deposits/Inoperative accounts in banks”, to all scheduled commercial banks urges banks to be pro-active and contact customers whose accounts have remained inoperative for over a year and find out why there are no transactions.

If the consumer has changed his residence or place of work, then most probably, his account will remain dormant. There are also consumers who keep accounts in their hometown and do not operate them regularly.

Therefore the RBI has instructed banks to not only contact customers who have not operated their account for a long time, but also transfer the money in the account to the new account of the customer, if the customer has shifted residence (or changed the job) and opened an account in another bank.

The RBI has also made mandatory for the banks that they should inform customers before declaring an account as dormant and give the account holder sufficient time to the customer to operate the account. If all such efforts fail, then only bank should declare an account as inoperative.

In case the customer contacts the bank after an account has been declared as dormant, then bank should facilitate reactivation of the account after verifying the signature and the identity of the account holder.

In this process bank must ensure the customer should not face any difficulty and inconvenience also no charges should be taken for activation, the RBI says.

After all these norms, still we find banks are exploiting the ignorant customers and violating them with impunity.