RBI allows Video KYC to reactivate Dormant Bank accounts

The banking sector regulator, the Reserve Bank of India (RBI), has amended the Know Your Customer (KYC) guidelines and allowed banks to conduct video KYC to reactivate dormant (inoperative) bank accounts and unclaimed deposits. To make banking simple and accessible, the RBI on 12 June 2025, issued several guidelines regarding the KYC norms in Banks. 

KYC is a set of Customer Identification Processes (CIF) adopted by banks when opening customers' bank accounts. 

The customer has to provide valid proof of identity, proof of address, and a recent photograph to the bank. 

RBI has notified that Driving License, Aadhaar Card,  Passport, Voters' Identity Card, or MGNREGA can be used for both as proof of identity and proof of address. 

PAN cards issued by the Income Tax Department are proof of identity only.

Changes made by the RBI in the KYC 

For low-risk customers, the banks will allow all transactions and complete the updation of KYC within one year when it is due or by June 30, 2026, whichever is later.

RBI has allowed banks to use their Business Correspondents (BC) to periodically update bank customers' KYC.

For inoperative/ unclaimed deposits 

To reactivate the inoperative/unclaimed deposits, the RBI has directed the banks to:

• Facilitate the video-based customer identification process (CIP),
• Facilitate KYC updates in any bank branch (including the non-home branch). The home branch is the branch where the customer has opened his/her bank account.

What are Inactive accounts and Unclaimed Deposits? 

Bank accounts (savings or current accounts) become inactive when there has been no customer-induced transaction for the last two years. These accounts are also called dormant accounts.

The customer-induced transactions include 

• Financial transactions (deposit or withdrawal) done by the customer or done on behalf of the account holder by the bank or a third party,
•  Non-financial transactions like checking account balance, etc, through an ATM, 

Unclaimed Deposits 

• The deposit with the bank where the customer has done no transaction(withdrawal or deposit) for the last 10 years.
• Customer accounts include all types of bank accounts, such as current accounts, savings accounts, fixed deposits, recurring deposits, and cash credit accounts.

What happens to the Unclaimed Deposits and DEAF? 

Banks must transfer the money lying in the bank accounts declared unclaimed deposits to the Depositor Education and Awareness Fund (DEAF) managed by the RBI.

RBI established DEAF in 2014 under the Banking Regulation Act 1949 provisions. 

The Fund is managed by a seven-member committee headed by a Deputy Governor of the RBI.

The banks are to return the amount with applicable interest to the customer or their legal heir of the account holder, whenever they claim it. 

RBI will provide money to the bank from the DEAF for this purpose.