The Reserve Bank of India (RBI) has released fresh directives for banks concerning inactive accounts. According to the regulations, banks are prohibited from imposing penalty charges on customers who fail to maintain minimum balance requirements in accounts that have remained inactive for more than two years.

An inactive account means you haven’t used it for two years or more. But if you use it to get government benefits or scholarships, it won’t be considered inactive, even if you haven’t made any transactions.

RBI: No Charges for Low Balances

Starting April 1st, 2024, new rules from RBI will stop banks from charging fees for not keeping a minimum balance. This change aims to reduce the amount of money sitting unused in bank accounts across India.

Banks will now have to send you a letter if your account becomes inactive. If they don’t hear back from you, they’ll contact someone you listed as a reference.

No Charges for Unused Accounts

RBI says banks can’t charge fees for inactive accounts. And if you want to start using your account again, they can’t charge you for that either.

RBI’s recent report shows that there’s a lot of money, about Rs. 42,272 crores, sitting in unused accounts as of March 2023. Banks transfer money from accounts that have been inactive for 10 years to a fund managed by RBI. Before these new rules, RBI already said banks couldn’t make your account balance go negative because of fees. But some banks didn’t follow this rule.

Following RBI’s new regulations, banks are required to notify customers about their deactivated accounts via SMS, letter, or email. Additionally, banks have been instructed to reach out to the individual who introduced the account holder or the nominated representative if there is no response from the account holder.

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