Question

As per the latest guidelines, a savings or a current account is classified as 'inoperative' or 'dormant' if there are no transactions in the account for over a period of.............. years

• A. 1 year
• B. 5 years
• C. 2 years
• D. 3 years

Answer 1

Answer:

C. 2 years

• According to the Reserve Bank of India (RBI) master circulars, an account is classified as inoperative or dormant if there have been no customer-induced transactions in the account for a period of over 2 years.
• Customer-Induced Transactions: These include financial transactions initiated by the account holder, such as deposits, withdrawals (via ATM, cheque, or branch), net banking transfers, or merchant payments.
• Non-Customer Induced Transactions: Transactions like service charges, penalties, interest credits, or tax deductions (TDS) do not qualify as customer-induced transactions and are disregarded when determining the dormancy status.
• Regulatory Objective: The classification is primarily a risk management measure to prevent fraudulent activities, such as identity theft or the misuse of abandoned accounts.
• Activation Process: To reactivate a dormant account, the account holder must submit a fresh KYC (Know Your Customer) application, along with proof of identity and address, even if the KYC documents were previously submitted.
• Recent RBI Directives: The RBI has mandated that banks must notify customers through SMS, email, or letters at least three months before an account is classified as inoperative.
• Bank Responsibility: Banks are required to conduct an annual review of inoperative accounts and proactively reach out to customers to encourage them to revive their accounts or settle the balances.
• Exemptions: Accounts such as Basic Savings Bank Deposit Accounts (BSBDA) and accounts maintained by minors or students may have specific variations in operational guidelines depending on the latest RBI circulars.