RBI Update: Relief for Bank Customers as RBI Revises Minimum Balance Penalty Rules.

Major Policy Shift: RBI Eases Rules on Inactive Savings Accounts

In a move that brings much-needed relief to millions of bank account holders across India, the Reserve Bank of India (RBI) has rolled out new guidelines regarding minimum balance requirements. The new regulations, effective immediately, are aimed at reducing penalties on inactive accounts and improving transparency within the banking system.

According to the RBI circular, savings accounts that remain inactive for two consecutive years will no longer attract penalties for not maintaining the minimum balance. This development is particularly significant for account holders in rural and semi-urban regions, where banking activity is often less frequent due to various socio-economic factors.

No More Penalties on Dormant Accounts

Under the updated framework, any account that remains dormant—meaning no customer-initiated transactions for 24 months—will be exempt from penalties related to minimum balance non-maintenance. This marks a considerable shift from earlier norms, where banks often levied service charges on inactive accounts, adding to the financial strain on low-income users.

The RBI has directed all banks to adhere to these revised rules without exception. Customers who believe they have been wrongly charged for inactivity-related penalties are encouraged to contact their bank directly. If unresolved, they can escalate the matter to the bank’s grievance redressal board or file a complaint via RBI’s official complaint management portal.

Special Provisions for Student and Government Scheme Accounts

In an additional customer-friendly move, the RBI has clarified that accounts opened for the purpose of scholarships or under government welfare schemes will not be considered inactive even if they show no transaction for two years. Furthermore, these accounts will continue to accrue interest during their dormancy period.

Banks are also restricted from levying any minimum balance penalty on such accounts, reinforcing the central bank’s commitment to financial inclusion and consumer protection.

Why RBI Introduced These Reforms

The RBI’s primary goal behind implementing these changes is to minimize the volume of unclaimed deposits and dormant accounts across the country’s financial institutions. By addressing these issues, the RBI aims to streamline account reactivation and ensure rightful owners can reclaim their funds.

As per the circular, these measures will also enhance the overall health of the Indian banking system by reducing operational inefficiencies and making customer engagement more transparent.