State Bank Of India Urges RBI To Redefine Account Activity Rules For Higher Inclusion

State Bank of India (SBI), the country's biggest lender, has sought RBI for an alteration in the rule of account activity. SBI has given a proposal to tag accounts operative if they are showing transactions such as balance inquiry as against having financial transactions that decide an account activity. It will address increasing numbers of accounts "inoperative" under current rules that generally rely on financial transactions as a criterion of account activity.

CS Setty, SBI chairman, has pointed this out specifically for accounts that are almost essentially conduits for the government's cash transfer schemes. "Often, in these accounts, after the DBT is credited, there are at most two or three debit transactions before the account is termed inoperative," Setty said on the sidelines of a bank event.

Currently, the regulations show that accounts become inactive if there is no financial activity in a given period. According to Setty, even a non-financial activity such as a balance check would send the message that the account holder is aware and engaged with their bank account. "When a customer does a non-financial transaction, it means that the account holder is aware and connected to the account. Thus, such accounts should be classified as active," he said.

Inoperative Accounts

Setty's observations have come at a time when RBI had issued a recent advisory to banks, focusing much importance on inoperative or frozen accounts. Banks have been advised to report quarterly results in the resolution of such an issue. SBI has now launched a special drive at all its over 22,000 branches and business correspondents to weed out inoperative accounts.

The bank is reactivating sleeping accounts, particularly those that have mobile phone account holders. But it does not provide information about the number of inoperative accounts.

Mis-selling Concerns and CSR Efforts

Commenting on the recent concerns over mis-selling of financial products, Setty said creating self-service digital tools for products such as insurance, pensions, and mutual funds would be the way forward. "An intuitive mobile interface can make these products self-consuming, reducing the need for physical interaction," he said, adding that SBI remains committed to ethical distribution practices.

The chairman also cited CSR for SBI, saying the bank has spent Rs 630 crore each year on CSR activities ranging from skill development in villages to vocational training provided through loans to businesses.

SBI honoured 29 Paralympic players for their Paris feats at the same event, emphasizing how they stand by the differently abled. Setty again emphasized the commitment towards fostering growth in several segments of society and towards a larger outreach through its bank and CSR initiatives.