The Reserve Bank of India (RBI) has made a significant proposal that may help thousands of bank clients who cannot retrieve their inactive accounts or unclaimed deposits. The draft circular released on May 23, 2025, recommends that banks facilitate customers to change their KYC (Know Your Customer) information, an important measure required to open dormant accounts and recover unclaimed amounts.
Inoperative accounts are those which have not experienced any customer-driven transactions over a period of years, typically ten years or longer. Such deposits are finally regarded as unclaimed. As per current regulations, if such accounts of more than ten years of inactivity exist, banks are required to credit the amount to the Depositor Education and Awareness (DEA) Fund of the RBI. This is analogous to unclaimed shares that go over to the Investor Education and Protection Fund (IEPF) after seven years.
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The RBI has suggested this process to be simplified by the new draft guidelines. Banks will now enable KYC updates through all branches, not only the customer's home branch. This shift would enable an individual to visit any of the branches of their bank and go through the steps required to bring their account back online. Additionally, on-demand, banks would also have to provide video KYC as an option. This would make it possible for customers to undergo the verification process remotely via a video call.
The RBI has also stated that designated Business Correspondents—representatives of the bank who serve customers in rural areas—can be utilised to assist customers in reactivating their accounts. This will particularly assist older customers, rural-based customers, or customers who cannot conveniently access a branch.
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When the KYC process is done through one of these mediums, the account can be activated again, and the customer can withdraw the funds that were previously counted as unclaimed money. If this suggestion is followed, it could save tremendous amounts of time, effort, and frustration that go into reclaiming forgotten or long-unclaimed money.
The circular draft is still not final. The RBI is now making the rules public and seeking comments from the public and stakeholders before they become official. Anyone who is interested in providing their input can do so until June 6, 2025. Comments can be given on the 'Connect 2 Regulate' page of the RBI website.
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If you or a member of your family has an account that has not been used for years, now is the time to find out its status. This suggestion could be a beneficial move in ensuring that money left in old accounts are not lost forever or hard to access.
