Inoperative accounts are those that have not been operated for a long time. Investors with inoperative accounts find that the money in the account is locked in and is not even earning an interest. However, the Reserve Bank of India (RBI) has now stepped in and reiterated its position on inoperative accounts by issuing clear instructions on these accounts.
When there are no transactions in a particular account for a period of two years then the account of the investor becomes an inoperative one. Here, the credits given for bank interest do not count as a transaction while direct instructions given will be counted as a transaction.
The bank has to get in touch with the customer if there is no transaction for a year and efforts should be made to trace the person holding the account.
The Reserve Bank has now said that such accounts should be earning some amount because the investor’s money is still lying there.
The savings account should earn the normal rate of interest, which is 3.5 per cent. When it comes to an unclaimed fixed deposit, the situation can be a bit different. Investors who have not claimed these deposits have their money lying with the bank and here the earning would also be 3.5 per cent. This is still a hit for investors in the sense that they could be earning a higher amount if they invest the money properly.
This will ensure that the investor gets some money for the amounts lying with the bank. They will also have a chance to get their account active again and won’t have to pay a reactivating charge. This is better than a situation where the investor was not earning anything.
On the other hand they must not rest with this position because they need to ensure that their money is earning the best return and this will be possible only when they are proactive about investing their money.
At the same time there is a need to make a careful check of all the amounts present with them so that they are able to ensure that the funds are not forgotten but are being put to the best use.