News

RBI proposes new rules to simplify KYC for dormant bank accounts

Tuesday 27 May 2025 10:22 CET | News

The Reserve Bank of India (RBI) has announced a draft amendment to simplify reactivating inactive accounts and claiming unclaimed deposits.

The initiative arises from the existing regulations stating that any bank deposit that has remained inactive for 10 years or longer is deemed inoperative and must be redirected to the Depositor Education and Awareness (DEA) Fund, which is managed by the RBI.

Challenges in reactivating customer accounts

Customers frequently encounter obstacles when trying to reactivate their accounts due to KYC update challenges, particularly in rural and semi-urban regions.

To tackle this issue, the RBI has suggested an amendment to its previous circular (dated January 1, 2024):

  • KYC updates at any branch: banks are now required to permit customers to update their KYC information at all branches, including those not designated as their home branches, to facilitate the activation of dormant accounts;

  • The utilisation of video KYC: should customers request it, banks may use the video Customer Identification Process (V-CIP) to remotely update KYC. However, this option is contingent on whether the bank provides the V-CIP service;

  • Support from business correspondents: banks can now engage authorised business correspondents (BCs) to collect KYC documents and assist customers in reactivating inactive accounts. This initiative aims to increase accessibility in remote locations.

These adjustments are in line with the overarching KYC Master Direction established in 2016, which the RBI continues to revise regularly to promote digital and inclusive banking.

 

RBI proposes new rules to simplify KYC for dormant bank accounts

 

Other developments from RBI

In April 2025, the Reserve Bank of India (RBI) launched a ‘Theme Neutral’ application facility as part of its ‘On Tap’ Regulatory Sandbox (RS) framework to encourage positive changes in the fintech sector.

This initiative allowed the bank to engage continuously with fintech teams and submit their proposals at any time without any thematic restrictions. The RBI has been running the Regulatory Sandbox since completing four thematic cohorts, gathering feedback from stakeholders to support innovation while ensuring regulatory compliance. In 2021, an ‘On Tap’ application facility was introduced for specific themes of closed cohorts, and the RBI expanded this strategy with the ‘Theme Neutral’ option.


Source: Link


Free Headlines in your E-mail

Every day we send out a free e-mail with the most important headlines of the last 24 hours.

Subscribe now

Keywords: fraud management, fraud detection, digital identity, fraud prevention, identity fraud
Categories: Fraud & Financial Crime
Companies: Reserve Bank of India
Countries: India
This article is part of category

Fraud & Financial Crime

Reserve Bank of India

|
Discover all the Company news on Reserve Bank of India and other articles related to Reserve Bank of India in The Paypers News, Reports, and insights on the payments and fintech industry:





Industry Events