If you have a bank account that you have not operated for a long time, it is absolutely essential that you know the Reserve Bank’s instructions on ‘inoperative accounts’. That’s because there is every possibility of your bank flouting those instructions and declaring your account as ‘inoperative’ without giving you any notice and even dishonouring your cheques issued on that account.
So in order to protect your interests, you need to know what exactly the regulator says. First and foremost, the Reserve Bank says an account (both savings and current) can be treated as ‘inoperative’ or ‘dormant’ only if there are no customer-induced transactions in the account for more than two years.
It also makes it clear 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 on “Unclaimed deposits/Inoperative accounts in banks”, issued on August 22, 2008 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.
In many cases, accounts remain dormant when consumers change their residence or place of work. There are also consumers who keep accounts in their hometown and do not operate them regularly.
So the RBI circular asks 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 Reserve Bank also mandates that banks inform customers before declaring an account as dormant and give the account holder sufficient time to operate the account. It’s only when all such efforts fail, should an account be declared as inoperative.
If the customer contacts the bank after an account is declared as dormant, the bank should facilitate reactivation of the account after verifying the signature and the identity of the account holder.
While doing so, the bank should ensure that the customer is not inconvenienced and there should not be any charge for activation, the RBI says.
Yet, you find banks exploiting the ignorance of consumers about these guidelines and violating them with impunity. Here is an example
I issued a cheque for Rs 93,000 which was dishonoured by the bank despite sufficient balance in the account. When I asked the bank for an explanation, they said my account had been declared as ‘inoperative’ as I had not used it for a year. Was the bank justified in doing this? The dishonoured cheque has caused me considerable embarrassment. How can I make the bank pay for its misdeed? Asks J.R.Tiwari.
The bank has violated RBI guidelines on several counts, first of all, the account was not dormant for two years. So the bank’s action was illegal. Second, from what you say, interest from a fixed deposit account was being credited into that account. So once again, the bank’s action was not in tune with the RBI mandate on the issue. Third, the bank did not even contact you before declaring the account as inoperative and dishonoured your cheque. So you must hold the bank accountable for its action and demand compensation. I must mention here that consumer courts have taken a very stern view of banks which have dishonoured cheques without reason. You can therefore approach the consumer court if the bank does not take responsibility for its negligence.
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