Dormant bank accounts : RBI issues vital clarification

A couple of months back the RBI had issued detailed
guidelines on inoperative or dormant bank accounts — savings as well as
current account. It had stated that if there are no transactions in the
account for a period over two years, it is to be treated as dormant. Further,
for the purpose of classifying an account as inoperative, both the types of
transactions i.e., debit as well as credit transactions induced at the
instance of customers as well as third party should be considered.

RBI now states that there may be instances where the
customer has given a mandate for crediting the interest on Fixed Deposit
account to the Savings Bank account and there are no other operations in the
Savings Bank account. Some doubts have arisen whether such an account is to be
treated as inoperative account after two years.

In this connection, the Banker of the Banks has clarified
that since the interest on Fixed Deposit account is credited to the Savings
Bank accounts as per the mandate of the customer, the same should be treated
as a customer induced transaction. As such, the account should be treated as
operative account as long as the interest on Fixed Deposit account is credited
to the Savings Bank account. The Savings Bank account can be treated as
inoperative account only after two years from the date of the last credit
entry of the interest on Fixed Deposit account.

(Source : Internet & Media Reports, 4-11-2009)