RBI regulations govern dormant accounts and nominee claims in India

Under Reserve Bank of India (RBI) instructions effective April 1, 2024, bank accounts in India become inoperative after two years of inactivity. An account is classified as inoperative if there are no customer-induced transactions—such as cash deposits, withdrawals, UPI payments, or transfers—for a period exceeding two years. While interest credits and bank-initiated debits do not count as activity, customer-initiated non-financial actions like KYC updates can maintain an account's active status.

Banks are required to warn customers after one year of inactivity. Inoperative accounts must continue to earn interest and should not be charged minimum-balance penalties. Once an account is classified as inoperative, transactions are restricted until the customer completes fresh KYC at a branch. If funds remain unclaimed for ten years, they are moved to the RBI's DEA Fund, though they remain claimable by the rightful owner.

Regarding deceased account holders, RBI guidelines ensure that funds are accessible to valid nominees, joint account holders, or legal heirs. Upon notification of a death, banks freeze the account to prevent unauthorized transactions. If a nominee is registered, the process involves submitting a claim form along with a death certificate and KYC documents. In cases where no nominee exists, legal heirs must provide a legal heir certificate and an indemnity bond to claim the balance.