How to Activate an Inoperative Bank Account or Claim an Unclaimed Deposit: RBI Rules Explained

What has changed

An inoperative bank account is not the same as a lost deposit. RBI's revised framework requires banks to help customers reactivate inoperative accounts and claim unclaimed deposits, with KYC updation available even at non-home branches. A 2025 amendment also permits authorised Business Correspondents to facilitate activation in the manner allowed by RBI's KYC directions.

When does a deposit become an unclaimed deposit?

RBI's 2025 amendment reiterates that the credit balance in a deposit account that has not been operated upon for ten years or more, or an amount remaining unclaimed for ten years or more, is required to be transferred by the bank to the Depositor Education and Awareness Fund maintained by RBI.

Transfer to the fund does not mean that the customer's claim disappears. The practical task is to approach the bank, establish the claim and complete the required customer-identification or KYC process.

Where can KYC be updated for activation?

RBI's June 12, 2025 amendment requires a bank to make KYC updation for activation of inoperative accounts and unclaimed deposits available at all branches, including non-home branches. Banks must also endeavour to provide KYC updation through Video-Customer Identification Process, subject to RBI's KYC directions.

The amendment additionally allows the services of an authorised Business Correspondent to be used for activation in accordance with the relevant KYC framework. This can be useful for customers who no longer live near the branch where the account was originally opened.

What should a customer do first?

- Identify the bank and account: collect the passbook, deposit receipt, old statement, account number or other records available.

- Check the bank's process: RBI requires banks to display information on activation of inoperative accounts and claims for unclaimed deposits on their websites and at branches.

- Complete KYC: approach any branch, including a non-home branch, and use V-CIP or an authorised Business Correspondent where the bank makes that channel available under RBI rules.

- Submit claim evidence: provide the identification and account-related documents requested under the bank's compliant procedure.

- Keep acknowledgement: retain the application or service-request reference and follow up if activation or payment remains pending.

What if the original account holder has died?

Where the depositor is deceased, the claim follows the bank's deceased-depositor settlement procedure rather than a normal customer activation. RBI's customer-service instructions distinguish accounts carrying a valid nomination or survivorship clause from accounts without such arrangements.

For an account with a valid nominee or survivorship clause, RBI's instructions state that payment to the survivor or nominee can give the bank a valid discharge if the bank establishes identity and death through appropriate evidence, there is no restraining court order, and the recipient is informed that payment does not extinguish claims that legal heirs may have against that recipient.

RBI has also instructed banks not to insist on succession certificate, probate or letters of administration merely as a condition for payment to a valid survivor or nominee in such cases. Accounts without a nominee or survivorship clause follow the bank's simplified legal-heir procedure and may require different documentation depending on the facts and the bank's approved policy.

Does an inoperative account stop earning interest?

Customers should not assume that an account becomes ownerless or that the bank can simply retain the money because the account is inactive. RBI's framework is designed to trace customers, facilitate activation and provide a process for claiming unclaimed deposits. The interest treatment depends on the type of deposit and the applicable banking instructions and contract, so customers should verify the amount credited by the bank when the claim is processed.

Practical controls for businesses and professionals

Businesses, trusts and professional firms should periodically review old bank accounts, fixed deposits and balances appearing in legacy ledgers. Where signatories, registered addresses or KYC records have changed, the entity should update records before an account becomes difficult to operate. Executors and families handling an estate should also inventory the deceased person's bank deposits and nomination records early.

Key takeaway

RBI requires banks to provide a workable route for activating inoperative accounts and claiming unclaimed deposits. KYC updation for activation must be available at all branches, including non-home branches, and banks should endeavour to offer V-CIP; authorised Business Correspondents can also facilitate activation under the applicable KYC framework. If the depositor has died, use the deceased-depositor claim process and check whether a valid nomination or survivorship clause exists before collecting legal-heir documentation.