In a bid to keep bank accounts active and prevent them from being tagged as inoperative, the State Bank of India (SBI), the country’s largest lender, has urged the Reserve Bank of India (RBI) to revise its rules and consider non-financial transactions, such as balance checks, for determining account activity.
C.S. Setty, Chairman of SBI, highlighted the challenge faced by millions of account holders, particularly those who primarily receive government welfare transfers under schemes like Direct Benefit Transfer (DBT). “After the credit of benefits, there are only two or three debit transactions before the account becomes dormant and is tagged as inoperative,” Setty explained at a bank event on Tuesday.
Non-Financial Transactions: A Signal of Account Awareness
Setty argued that even a non-financial transaction reflects the customer’s awareness and usage of the account. “When a customer checks their balance or updates their passbook, it shows they are engaged with the account. This should be enough to classify it as active,” he said, adding that SBI has formally raised the issue with the RBI.
Currently, RBI guidelines classify accounts as inoperative if there are no financial transactions for a specific period. This results in a significant number of accounts, especially those linked to government schemes, being unnecessarily frozen.
Special Drive to Revive Inoperative Accounts
In response to the RBI’s recent directive to address the issue of dormant accounts, SBI has launched a special drive to reach out to affected customers. With over 22,000 branches and a vast network of business correspondents, the bank is contacting account holders, particularly those with mobile phones, to reactivate their accounts.
Misselling Concerns and Product Simplification
Addressing concerns about the misselling of financial products, including insurance and mutual funds, Setty emphasized the need for customer-centric solutions. He suggested that banks should focus on creating self-service mobile interfaces that simplify the process of buying financial products, reducing dependency on in-branch sales interactions.
“No stakeholder wants to engage in misselling. Our goal is to ensure transparency and ease of access for customers,” Setty clarified.
SBI’s CSR Focus: Empowering Rural India and Supporting Paralympians
On a different note, Setty highlighted SBI’s commitment to corporate social responsibility (CSR), with an annual spend of over ₹630 crore, equivalent to 1% of the bank’s net profit. A significant portion of this is directed towards skill development programs in rural areas, enabling beneficiaries to gain vocational skills and access business loans.
At the same event, SBI felicitated 29 Indian athletes who represented the country at the recently concluded Paralympics in Paris. Setty reaffirmed the bank’s focus on supporting the differently-abled community, aiming for a greater impact in future sporting events.
With initiatives spanning from customer engagement to social empowerment, SBI continues to lead as a customer-centric and socially responsible banking institution in India.