RBI Rules on Dormant Accounts
Across India, a significant amount of money lies untouched in bank accounts not because it was forgotten forever, but because the account holders stopped operating them. These unclaimed bank deposits arise when savings accounts, current accounts, or fixed deposits remain inactive for extended periods.
To safeguard depositors’ interests and maintain transparency, the Reserve Bank of India (RBI) has laid down clear rules on how banks must classify, manage, and disclose such accounts while ensuring that depositors or their legal heirs can reclaim their money at any time.
What Are Unclaimed Bank Deposits?
Unclaimed bank deposits are balances in bank accounts that have seen no customer-initiated transactions for a continuous period of 10 years.
These deposits typically include:
- Savings and current account balances
- Fixed deposits that have matured but not been claimed
- Interest accrued on such deposits
Once this threshold is crossed, banks are required to transfer the funds to a central pool, while maintaining detailed records of the original owners.
Inactive vs Dormant Accounts: What’s the Difference?
RBI distinguishes between two stages of inactivity:
1. Inactive Account
An account is considered inactive if there are no customer-initiated transactions for 2 consecutive years.
2. Dormant Account
An account becomes dormant after 2 years of inactivity, triggering:
- Enhanced monitoring
- Restrictions to prevent misuse
- Mandatory customer re-verification before reactivation
Dormant accounts are closely tracked due to their higher vulnerability to fraud and misuse.
RBI Rules Governing Unclaimed Deposits
The RBI mandates banks to:
- Identify inactive and dormant accounts periodically
- Attempt to contact account holders using available details
- Publish details of unclaimed deposits on bank websites
- Transfer eligible deposits to the Depositor Education and Awareness Fund (DEAF) after 10 years
Despite the transfer, banks remain responsible for processing claims and returning funds to rightful owners.
What Is the Depositor Education and Awareness Fund (DEAF)?
The DEAF is a fund established under RBI directions to house unclaimed bank deposits.
Key points:
- Banks transfer eligible unclaimed balances to DEAF
- Funds remain claimable at all times
- Interest continues to accrue as per RBI guidelines
- Banks must honour valid claims even after transfer
The purpose of DEAF is custodianship not confiscation.
Why Do Bank Deposits Go Unclaimed?
Unclaimed deposits are often the result of long-term data and identity gaps, including:
- Change in address or contact information
- Death of account holder without nominee updates
- Multiple bank relationships across years
- Forgotten fixed deposits
- Poor awareness among legal heirs
In many cases, families are unaware that such accounts even exist.
How to Check for Unclaimed Bank Deposits
Individuals or heirs can check for unclaimed deposits by:
- Visiting bank websites that publish unclaimed deposit lists
- Using RBI-mandated centralized search facilities
- Contacting the branch where the account was held
Basic details such as name, last known address, and branch are usually sufficient to begin the search.
How to Claim Unclaimed Bank Deposits
The claim process generally involves:
Step 1: Submit a Claim Request
Approach the concerned bank branch with:
- Valid identity proof
- Account details (if available)
Step 2: Verification
Banks conduct:
- Identity verification
- KYC revalidation
- Legal heir verification (if applicable)
Step 3: Settlement
Once verified:
- Funds are released to the claimant
- Interest is paid as per applicable rules
There is no deadline for making a legitimate claim.
Claiming Unclaimed Deposits as a Legal Heir
Legal heirs may need to provide:
- Death certificate of the account holder
- Proof of relationship
- Succession certificate or legal heir certificate (in certain cases)
Banks follow due diligence to ensure funds reach the rightful claimant.
Why Dormant Accounts Pose a Risk for Banks
From a systemic perspective, dormant and unclaimed accounts increase:
- Fraud exposure
- Compliance burden
- Reconciliation challenges
- Identity mismatches across financial systems
This is why RBI places strong emphasis on continuous customer identification and record accuracy.
The Bigger Picture: Unclaimed Deposits as an Identity Challenge
Unclaimed bank deposits highlight a larger issue fragmented identity records over time.
When identity, contact details, and nominee information are not consistently maintained across institutions, accounts drift into dormancy. Preventing unclaimed deposits requires:
- Strong identity verification
- Periodic data updates
- Better continuity across financial relationships
This is where modern digital public infrastructure plays a critical role.
Conclusion
Unclaimed bank deposits are not lost, but the result of inactivity and gaps in identity or nominee records. While RBI safeguards ensure these funds remain claimable, preventing dormancy depends on timely updates, strong identity verification, and continuity in banking relationships.
