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FOR those enjoying the benefits of electronic banking, the physical location of a bank may not matter much, but to a large number of consumers who still visit their banks for various transactions, an important factor determining their choice of a bank is its proximity to their residence, or place of work. So it is only natural that one changes the bank when one moves to a new house, or shifts to another job. However, you may have kept the old account, thinking that you will continue to operate it, but may not have found the time to visit the bank. There are also instances of customers keeping accounts in their hometowns and not using these frequently. But beware — a cheque issued on such accounts may well get dishonoured on grounds of the accounts being inoperative. Or, when you do find the time and visit your old bank, you may be told that your account is closed because you did not operate it for a long time. Now, before declaring an account as inoperative and denying you access to your money, you would expect the bank to at least inform you. In fact, the RBI guidelines on the subject clearly mandate that banks do so, but then banks in India have made a habit of violating the regulator's guidelines. Take the recent case of a person whose cheque for Rs 90,000 was dishonoured by the bank on grounds of the account being inoperative. This action violated the RBI guidelines on several counts. First, the account was not dormant for two years. Second, the interest from a fixed deposit account was being credited to it. Third, the bank did not inform the consumer of its intention to declare it as inoperative. The Reserve Bank circular on "Unclaimed deposits/inoperative accounts in banks", issued on August 22, 2008, to all scheduled commercial banks says: "Banks should make an annual review of accounts in which there are no operations (i.e. no credit or debit other than crediting of periodic interest or debiting of service charges) for more than one year. The banks may approach the customers and inform them in writing that there has been no operation in their accounts, and ascertain the reasons for the same. In case the non-operation in the account is due to shifting of the customers from the locality, they may be asked to provide the details of the new bank accounts to which the balance in the existing account could be transferred." In fact the circular urges banks to be pro-active in tracing the whereabouts of people whose accounts are dormant, but obviously banks find it profitable not to do so because they enjoy such unclaimed deposits. As on December 31, 2008, the total amount from unclaimed deposits lying with banks was to the tune of Rs 1188.07 crore. The RBI circular makes it clear that an account (savings as well as current) should be treated as inoperative or dormant only if there are no transactions in the account for over two years. However, in case of savings bank accounts, the bank should continue to pay interest. It also says that operation of such accounts may be allowed after ensuring the verification of the signatures and identities, but the bank should ensure that the customers are not inconvenienced, and there should not be any charge for activation. The circular clarifies that for the purpose of classifying an account as inoperative, all types of transactions — debit as well as credit transactions induced at the instance of customers, as well as third party — should be considered. However, the service charges levied by the bank or interest credited by the bank should not be considered. Subsequently, in its circular of October 30, 2009, the RBI further clarifies that where a 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, it should still be considered as a customer-induced transaction, and such accounts should be treated as operative accounts. So, remember, if you
have any dormant account, ensure that you operate it once in a while
to keep it alive. If the bank violates any RBI guidelines with regard
to the account, quote these circulars to them. You can also file a
complaint against such violations to the RBI.
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