Bank Account Rules: SBI gives suggestion to RBI to simplify rules to activate Dormant Bank Accounts
Recently, the Reserve Bank of India’s (RBI) has asked Banks to reduce the number of inoperative and frozen accounts. Now the State Bank of India (SBI) has requested RBI that non-financial transactions, such as balance inquiries, should also be considered sufficient to tag an account as operative.
Speaking at a banking event on Tuesday, SBI Chairman C.S. Setty highlighted that many accounts, especially those linked to government welfare schemes like Direct Benefit Transfers (DBTs), often witness limited transactions.
“Once funds are credited under DBT schemes, there are usually only two or three debit transactions before the account becomes dormant,” Setty explained. He emphasized that even non-financial transactions should signal account activity, adding, “We have raised this issue with the Reserve Bank of India.”
RBI’s Directive on Inoperative Accounts
The RBI recently issued guidelines urging banks to simplify the activation of inoperative accounts, many of which remain dormant due to a lack of customer-initiated transactions or delays in updating Know Your Customer (KYC) details. Banks were instructed to enable KYC updates via digital platforms, non-home branches, and video-based processes.
“Since many dormant accounts belong to underprivileged individuals, especially those tied to government welfare schemes, banks must adopt an empathetic approach and facilitate their activation,” the RBI stated. The directive also recommended special campaigns to address the issue and quarterly progress reports from banks.
SBI’s Response
Setty noted that the current framework primarily focuses on financial transactions, resulting in numerous accounts being tagged as inoperative. However, he argued that non-financial transactions, such as balance checks, should reflect a customer’s awareness and engagement with their account.
To address the challenge, SBI has launched a special drive targeting inoperative accounts, leveraging its extensive network of over 22,000 branches and business correspondents to reach customers, particularly those with mobile connectivity.
Concerns About Misselling
On the issue of potential misselling of financial products, highlighted by Finance Minister Nirmala Sitharaman, Setty stressed the importance of making products like insurance, pensions, and mutual funds more accessible.
“Creating a user-friendly mobile interface for these products can reduce dependence on physical interactions, often tied to visits for other services like loans,” he suggested, adding that no stakeholder intends to engage in misselling.
Corporate Social Responsibility Initiatives
At the same event, SBI honored 29 athletes who represented India at the Paris Paralympics. Setty reiterated the bank’s commitment to the differently-abled segment, stating that SBI spends over ₹630 crore annually on Corporate Social Responsibility (CSR) efforts.
Most of the bank’s CSR funds are allocated to skill development initiatives in rural areas, providing vocational training tied to business loans for enterprising beneficiaries.
SBI’s proactive measures, both in addressing dormant accounts and fostering inclusive growth, underscore its commitment to serving its diverse customer base and contributing to national development.
