The Reserve Bank of India has updated guidelines to simplify the process for reactivating bank accounts that have been dormant for over two years. Customers can now complete the required KYC verification at any bank branch or through video services, free of charge, to restore account access.
The Reserve Bank of India has introduced clear, consumer-friendly standards to help individuals regain control of their inactive bank accounts. A bank account is classified as inoperative if it has had no customer-initiated transactions for more than two years. This classification is primarily a security measure intended to prevent potential fraud, rather than a penalty for the account holder. The money in these accounts remains fully secure, continues to earn interest, and is protected under standard banking regulations.
One of the most significant changes is the removal of the need to visit the original home branch for administrative updates. Under the latest directives, banks must allow customers to complete their Know Your Customer (KYC) verification at any branch location. This is particularly helpful for people who have moved to a different city or changed jobs since they first opened their accounts. Furthermore, banks that offer Video Customer Identification Process (V-CIP) services are required to use this digital channel for account reactivation if a customer chooses it, making the process faster and more accessible.
To ensure transparency, regulatory policy explicitly forbids banks from charging any service fees for the reactivation of an inoperative account. Once a customer submits the necessary identification and address proof, the bank is obligated to restore full account operations within three working days. This directive aims to reduce the growing volume of unclaimed deposits held within the Indian banking system, which has become a significant area of focus for the regulator.
For accounts that remain inactive for more than ten years, the balances are categorized as unclaimed deposits. These funds are transferred to the Depositor Education and Awareness Fund (DEAF) maintained by the Reserve Bank of India. However, this transfer does not mean the money is lost. Depositors retain the legal right to reclaim these balances. To help people locate such accounts across different banks, the central bank provides the UDGAM portal, a centralized online system. If a bank does not process a valid request for reactivation or fails to address issues regarding unclaimed deposits, customers have the option to seek resolution through the Reserve Bank’s Integrated Ombudsman Scheme after first completing the bank's internal complaint process.