Balance in inoperative accounts


Huge balance is lying in inoperative accounts in banks with even many account-holders having forgotten about their bank-accounts. Reserve Bank of India (RBI) has introduced Know-Your-Customer (KYC) forms which has been made mandatory also for closing such inoperative accounts. Such cumbersome practice not only is causing difficulty to account-holders wishing to close their inoperative accounts, but also creating a big loss of man-hours of bank-employees apart from unnecessary data-entries and record-keeping. Frauds are reported through some bank-employees misappropriating funds in such inoperative accounts where amount is large. RBI should direct all banks to close all accounts not operated for say last three years, and send the remittance through pay-orders by Speed Post at last known addresses of account-holders at least for accounts having balance of say Rs 10,000 or less.

In case of return of Speed-Post envelopes, formalities like of KYC form and succession-certificates etc may be required. For amounts bigger than Rs 10,000, account-holders should be informed about their existing balance and to approach banks either to make accounts operative or close these in a time-bound period after which all such balances should be transferred to Depositor-Educative-Awareness-Fund (DEAF). With private sector dominating banking sector, public-money lying in inoperative accounts must not be allowed to be retained by banks. Frequent change of account-numbers by banks should be prevented by making it mandatory for all banks to allot 15-digit account-numbers. Confusing and frequently changing account-numbers result in bouncing of electronic fund-transfers.

Subhash Chandra Agrawal

(The views expressed by the author in the article are his/her own.)