..... . VALI disclosures . .....: 14/08/25, The Reserve Bank of India (RBI) has rolled out a game-changing set of guidelines to help customers easily reactivate dormant bank accounts and claim long-forgotten deposits.

Thursday, August 14, 2025

14/08/25, The Reserve Bank of India (RBI) has rolled out a game-changing set of guidelines to help customers easily reactivate dormant bank accounts and claim long-forgotten deposits.

With over ₹42,000 crore lying unclaimed in inactive accounts across Indian banks, the central bank’s latest move is a significant step toward improving financial access and inclusion.

Here’s what’s new, and why it matters.

Dormant Accounts: What’s the Issue?

Bank accounts become “inoperative” when there’s no customer-initiated activity for two consecutive years. These accounts are often neglected or forgotten, even if they contain funds. The result? Billions of rupees sit untouched while account holders face a maze of red tape to get their money back.

Until now, reactivating such accounts involved visiting the original branch, submitting updated KYC documents, and waiting through verification delays.

The Big Shift: What RBI Has Changed

With the new guidelines announced on June 12, 2025, the RBI has simplified the entire process, giving customers multiple ways to update their KYC and reclaim access to their dormant accounts.

Here's what’s new:

Video KYC: Now you can verify your identity from anywhere using your phone or laptop, no branch visit needed.
Any Bank Branch Access: Customers can update their KYC at any branch of their bank, not just the one where the account was opened.
Business Correspondents (BCs): In rural and remote areas, customers can now update KYC via local BC agents authorized by banks.
No Fees Involved: The reactivation process is completely free of charge for customers.

More Customer-Friendly Features

The RBI is not just simplifying the paperwork — it's also making sure people stay informed and in control of their accounts.

Alerts and Reminders: Banks must now notify customers via SMS and email when their accounts approach dormancy or if action is needed.
Search Unclaimed Deposits Online: The RBI’s Udgam Portal is now integrated with multiple banks, allowing customers to search for forgotten deposits using simple identifiers like PAN or Aadhaar.
No More Home Branch Dependence: The days of traveling to your original branch to fix your KYC are over — a relief for people who’ve moved cities or changed jobs.

Why This Matters

The RBI’s move is being welcomed across the banking sector for good reason. It’s practical, timely, and puts the customer first.

Here’s why it’s a big deal:

₹42,000 crore in unclaimed deposits can now be more easily returned to their rightful owners.
Senior citizens and rural customers, who often face mobility or access issues, can now reclaim their funds without hassle.
Migrants and working professionals who have switched cities can handle everything remotely.

Banks are also on board. Many have already begun upgrading their systems to accommodate video KYC and have started preparing customer awareness drives.

The Road to This Change

These guidelines didn’t arrive overnight. The RBI released a draft circular in May 2025 and invited public feedback through June 6. After evaluating inputs from customers, banks, and experts, the final framework was published on June 12.

This feedback-driven approach ensures the new rules are not only technically sound but also grounded in real-world usability.

How to Reactivate Your Account

Think you might have an inactive account or unclaimed funds? Here’s what you need to do:

Check Your Account Status: Log in to your bank’s app or visit the RBI’s Udgam Portal to search for dormant accounts or unclaimed funds.
Update KYC: Choose the most convenient method: Video KYC, Visit any branch or Meet with a Business Correspondent
Request Reactivation: Once your KYC is verified, ask your bank to reactivate the account.
Make a Transaction: A small deposit or withdrawal will ensure your account is active again.

Looking Ahead

The RBI’s latest move marks a shift toward smarter, more accessible banking. By cutting down on red tape and using tech to reach people where they are, the central bank is helping millions regain control of their finances.

If you’ve ever left behind a bank account or know someone who has, now is the perfect time to check and reclaim what’s rightfully yours.

Quick Tip: e-KYC has become a key enabler for many banking services, including fast loan approvals from banks and NBFCs.

source: Insight Daily Hunt

No comments:

Trade Cycles

The four important features of Trade Cycle are (i) Recovery, (ii) Boom, (iii) Recession, and (iv) Depression!

The trades cycle or business cycle are cyclical fluctuations of an economy. A full trade cycle has got four phases: (i) Recovery, (ii) Boom, (iii) Recession, and (iv) depression. The upward phase of a trade cycle or prosperity is divided into two stages—recovery and boom, and the downward phase of a trade cycle is also divided into two stages—recession and depression.

Phases of Trade Cycle:

The phases of trade cycle are explained with a diagram:

(1) Recovery:

In the early period of recovery, entrepreneurs increase the level of investment which in turn increases employment and income. Employment increases purchasing power and this leads to an increase in demand for consumer goods.

As a result, demand for goods will press upon their supply and it shall, thereby, lead to a rise in prices. The demand for consumer’s goods shall encourage the demand for producer’s goods.

The rise in prices shall depend upon the gestation period of investment. The longer the period of investment, the higher shall be the price rise. The rise of prices shall bring about a change in the distribution of income. Rent, wages, interest do not rise in the same proportion as prices.

Consequently, the margin of profit improves. The wholesale prices rise more than retail prices. The prices of raw materials rise more than the prices of semi-finished goods and the prices of semi-finished goods use more than the prices of finished goods.

(2) Boom:

The rate of investment increases still further. Owing to the spread of a wave of optimism in business, the level of production increases and the boom gathers momentum. More investment is possible only through credit creation. During a period of boom, the economy surpasses the level of full employment and enters a stage of over full employment.

(3) Recession:

The orders for raw materials are reduced on the onset of a recession. The rate of investment in producers’ goods industries and housing construction declines. Liquidity preference rises in society and owing to a contraction of money supply, the prices falls. A wave of pessimism spreads in business and those markets which were sometime before sellers markets become buyer’s markets now.

(4) Depression:

The main feature of a depression is a general fall in economic activity. Production, employment and income decline. The prices fall and the main factor responsible for it is, a fall in the purchasing power.

The distribution of national income changes. As the costs are rigid in nature, the margin of profit declines. Machines are not used to their full capacity in factories, because effective demand is much less. The prices of finished goods fall less than the prices of raw materials.

✳Reality Tips to Traders

1)Trading in the stock market is a marathon. 2)Protecting your capital is key. (Learn to protect first) 3)Making 0 on the day is better than losing 50k 4)Losses happen; they are part of this business. 5)It’s not you vs. the market. It’s you VS you. 6)You are your biggest enemy; learn to be mentally disciplined. 7)Don’t follow the majority; follow the correct path. 8)Traders without a stop loss end up not being traders for long. 9)There is always another trade. 10)The big money is made waiting for the right set-ups. 11)Waiting for the right trade is the most powerful strategy. 12)It is better to cut a loss than to wait to be proven right. 13)Position sizing can make or break you. 14)Worry about the downside before you even think about the upside. 15)Don’t listen to headlines

..BANKING TERMINOLOGY

There are various types of Banks: PSU Banks, Private Banks, Co-operative/Regional Banks, Small Finance Banks and Foreign Banks. When you deposit money in a bank, let's say the bank gives you an interest rate of 4%. But when the bank lends out this money, they lend it out at say, 12%. The difference of 8% in the above scenario is effectively the profit of the bank! The loans that do not pay interest for 90 days are known as Non-performing Assets. Banks have to provide for such bad loans. Structure of a Bank Asset for a Bank: The asset portion of a bank's capital includes cash, government securities, and interest-earning loans (e.g., mortgages, letters of credit, and inter-bank loans). Liabilities for a Bank: The bank's main liabilities are its capital (including cash reserves and, often, subordinated debt) and deposits. The latter may be from domestic or foreign sources (corporations and firms, private individuals, other banks, and even governments). Banks are required to maintain Liquidity with the Reserve Bank of India: SLR (Statutory Liquidity Ratio): It is the money a bank needs to preserve in the form of cash, gold or government Bonds before providing credit customers. This limitation is added by RBI on banks to make funds available to customers on-demand at your earliest convenience. Banks are required to maintain SLR at 18%. CRR (Cash Reserve Ratio): Banks are required to hold a certain proportion of their deposits in the form of cash. Banks don’t hold these as cash with themselves, but deposit such amounts with RBI / currency chests. CRR rate is at 4.5% currently. Repo Rate: The rate at which the RBI lends short-term money to the banks. The RBI through its Monetary Policy committee changes the repo rate to balance growth and Inflation. Reverse Repo rate: The rate at which banks park their short-term excess liquidity with the RBI. Now let us understand various terminologies for Banks Net Interest Income (NII): This is the spread the bank makes on its lending. It is calculated as Interest Income – Interest Expended Net Interest Margin (NIM): This is the spread the bank makes on its lending. It is the earning which is left after deducting the cost paid to depositors from its yields on Loans. This is denoted in % terms. The formula is Yield on Loans – Cost of funds Capital Adequacy Ratio (CAR): The capital adequacy ratio (CAR) is a measure of a bank's available capital expressed as a percentage of a bank's risk-weighted credit exposures. Essentially, it is the Capital that is available to lend. Tier I Capital – In simple words this capital is freely available with the bank to lend out. Tier II Capital- This is the capital tied up somewhere and is less freely available to lend. In case of an adverse event, the bank can use this capital to lend. Under Basel III norms, a bank’s tier 1+tier 2 capital must be a minimum of 8% of its risk-weighted holdings. The minimum capital adequacy ratio, also including the capital conservation buffer, is 10.5%. Current Account Saving Account (CASA)- There is no interest paid on the Current Account and a small interest rate is paid on a savings account. The combination of both is called CASA which shows the liabilities of the bank on which it pays relatively less interest. Deposits: Bank deposits are a savings product that customers can use to hold an amount of money at a bank for a specified length of time. In return, the financial institution will pay the customer the relevant amount of interest, based on how much they choose to deposit and for how long. Now let us come to NPA. Gross NPA (GNPA): It is the total loans on which no payment has been paid for 90 days or more. GNPA % is usually shown in each Bank’s quarterly results. The percentage is basically the GNPA amount as a % of the total advances. Slippages: Slippages denote the fresh amount of loans that have turned bad in a year. The slippage ratio of a bank is calculated as Fresh accretion of NPAs during the year /Total standard assets at the beginning of the year multiplied by 100. Provisioning Coverage Ratio (PCR): This is the ratio of provisioning to GNPA and indicates the extent of funds a bank has kept aside to cover loan losses. For Instance, a company has GNPAs of Rs 100 and they have set aside 50 Rs, then the PCR is 50%. Net NPA (NNPA): The total figure left after deducting provisions made for bad loans from GNPA. (GNPA – Provisions+upgrades/writeoffs = NNPA) Special Mention Account (SMA) SMA-0 is a category in which stress with respect to the principal and interest has remained overdue for a period of 0 to 30 days. SMA-1 is a category in which stress with respect to the principal and interest has remained overdue for a period of 30-60 days. SMA-2 is a category in which stress with respect to the principal and interest has remained overdue for a period of 60-90 days

..... . VALI disclosures . .....

Pages

logo

Thursday, August 14, 2025

14/08/25, The Reserve Bank of India (RBI) has rolled out a game-changing set of guidelines to help customers easily reactivate dormant bank accounts and claim long-forgotten deposits.

No comments:

Today's

14/08/25, The Reserve Bank of India (RBI) has rolled out a game-changing set of guidelines to help customers easily reactivate dormant bank accounts and claim long-forgotten deposits.

.

Translate