RBI’s New Minimum-Balance Rules: What Bank Customers Need to Know
The Reserve Bank of India has issued a significant circular changing how banks may treat inactive accounts and levy minimum-balance penalties. The move aims to protect small depositors, reduce unclaimed balances, and bring greater fairness to routine banking charges. Here’s a clear summary of what the rules mean for customers and banks — and what you should do next.
Key change at a glance
- No penalties for inactive accounts: Banks are barred from charging fees for non-maintenance of minimum balance on accounts that have been inoperative — that is, accounts with no transactions for over two years.
- Effective date: The circular says the rules take effect from April 1 (as specified in the RBI notice).
- No reactivation fees: Banks cannot charge customers to reactivate accounts that were classified as inactive.
Which accounts are protected?
The rule applies to private-sector savings and current accounts that have become inoperative due to lack of transactions. Importantly, however, certain types of accounts are explicitly excluded from being classified as inactive even if they have no transactions — for example, accounts opened specifically to receive scholarships or Direct Benefit Transfers (DBT).
Why RBI introduced the change
RBI’s guidance is intended to:
- Reduce unclaimed deposits sitting idle in banks and improve the process for returning funds to rightful owners.
- Prevent customers — especially low-balance savers — from losing funds to penalty charges that can push their accounts into negative balances.
- Encourage banks to proactively contact dormant customers and restore account activity where needed.
What banks must do
- Notify customers before classifying an account as inactive — via SMS, email or physical letter.
- If the account holder does not respond, banks must attempt to reach the introducer (the person who opened the account) or the nominee.
- Ensure reactivation and waiver of minimum-balance penalties for dormant accounts, per the circular.
Practical implications for customers
- If you haven’t used an account for a long time, it may be classified inactive — but you should not be charged minimum-balance penalties once that happens.
- If you plan to reactivate an account, banks must do so without charging a reactivation fee.
- Keep your contact and bank details up to date so banks can reach you before any status change.
- Beware of negative balances: previously, penalties could drain an account into the negative, and subsequent deposits were first applied to cover those charges.
Action steps you should take
- Check all your accounts for recent activity and balance.
- Update contact details (mobile, email, address, nominee) with your bank.
- Respond promptly to any bank communication about inactivity.
- If you find an unlawful penalty levied, raise a complaint with your bank and escalate to the RBI ombudsman if not resolved.
Final takeaway
RBI’s new rules are customer-friendly: they protect small and inactive accounts from punitive charges and simplify reactivation. For account holders, the best response is simple — keep your records current, watch for bank notices, and reactivate dormant accounts if you intend to use them. If problems arise, use the bank’s grievance channels or the RBI ombudsman to seek redress.
