The Reserve Bank of India (RBI) issued revised guidelines for reactivating the inoperative accounts. In the circular ‘Inoperative Accounts/ Unclaimed Deposits in Banks - Revised Instructions (Amendment) 2025’ dated June 12, 2025, RBI laid down, “A bank shall make available the facility of updation of KYC for activation of inoperative accounts and unclaimed deposits at all branches (including non-home branches). Further, a bank shall endeavour to provide the facility of updation of KYC in such accounts and deposits through Video-Customer Identification Process (V-CIP). The V-CIP related instructions under Master Direction - Know Your Customer (KYC) Direction, 2016 dated February 25, 2016 (as updated from time to time) shall be adhered to by the bank.”
When Does A Bank Account Become Inoperative?
A bank account becomes inoperative when there is no transaction by the customer for more than two years. If the account remains inoperative for 10 years, the balance in such account is transferred to the Depositor Education and Awareness (DEA) Fund of the RBI as unclaimed deposits. According to the RBI’s data, there were Rs 78,213 crore worth of unclaimed deposits at the end of March 2024.
Until now, reactivating an account required account holders to visit a branch of their bank and submit the necessary documents. Alternatively, they could use the Video-Customer Identification Process (V-CIP) to get their details verified, but only if their bank provided this option.
However, with the revised circular, the RBI now emphasises the use of V-CIP by banks in all cases to update account holders’ details, rather than only when requested by customers.
Its earlier instruction in the circular dated January 1, 2024, read, “The banks shall make available the facility of updation of KYC for activation of inoperative accounts/ unclaimed deposits at all branches (including non-home branches) and through Video-Customer Identification Process (V-CIP) if requested by the account holder, subject to the facility of V-CIP being provided by the bank.”
Besides this, RBI has directed banks to utilise the services of business correspondents to activate such accounts. The latest circular reads, “The services of an authorised Business Correspondent of the bank may be utilised for activation of inoperative accounts as prescribed in paragraph 38(a)(iia) of the above Master Direction.”
How To Activate An Inoperative Account?
When an account becomes inoperative, the account holder cannot do any transaction in that account without reactivating it. A few of the main reasons for an account to become inoperative are: no transaction by the customer, KYC not updated, and no details of the nominee in the account in case of the holder’s death.
According to the RBI FAQs, “For activation of inoperative accounts, the customer can update his/ her KYC information/ data at home/ non-home branch of the RE (regulated entity), and also through V-CIP, subject to the facility of V-CIP being provided by the bank. The banks shall activate the inoperative accounts, only after adhering to the KYC guidelines provided in the Master Direction on KYC.”
Updating the KYC at any branch is particularly helpful for senior citizens and anyone who finds it difficult to visit their home branch. Now, with the thrust on the V-CIP by the bank, the process is expected to become more user-friendly.
