Bank Account Holders: RBI Eases Minimum Balance Charge Rule, Can Banks Impose Penalty Now?

Bank Account Holders: The Reserve Bank of India has informed banks that they cannot impose penalties for failing to maintain the minimum balance on accounts that have been dormant for more than two years. It further stated that banks cannot declare accounts set up to receive scholarship funds or direct benefit transfers inactive if they have not been utilised for more than two years.

RBI's Circular on Inoperative Accounts

According to the newspaper, the directive to banks is part of the RBI's recent circular on inoperative accounts, as well as its efforts to limit the amount of unclaimed bank deposits. According to the Times of India, the new rules went into force on April 1.

Notification Methods for Account Termination

Banks will be required to notify consumers of account termination via SMS, letter, or email under the new guidelines. If the owner of a dormant account does not answer, banks have been instructed to contact the person who introduced the account holder or the account holder's nominees.

Legal Restrictions on Minimum Balance Penalties

Banks are not permitted by law to assess penalties for failing to maintain a minimum balance in any account labelled as inoperative. There will be no fees for reactivating inactive accounts. According to the RBI, unclaimed deposits will have climbed by 28% to Rs 42,272 crore by the end of March 2023, up from Rs 32,934 crore in the previous year. Any sum in deposit accounts that have not been used for 10 years or longer must be transferred by banks to the RBI's Depositors and Education Awareness Fund.

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