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RBI asks banks to be cautious on inoperative account payments

The Reserve Bank has asked banks to exercise caution before making payments to customers claiming funds lying idle in inoperative accounts.

“Banks are advised to invariably verify the genuineness of the transactions and ensure that the amounts paid to the customers are properly audited by the internal auditors / statutory auditors,” RBI said in a communique to banks.

It also asked banks to carry out proper due diligence in accordance with risk category of the customers before making any such payments.

The RBI directive came in the wake of rising cases where banks claimed substantial refunds from the Depositor Education and Awareness Fund, soon after transferring the amounts in the fund.

RBI said it was not clear as to how the customers or claimants, who did not operate the account for ten years or more, approached the banks for repayment immediately after the balances in their inoperative accounts were transferred to the fund.

“Banks should, therefore, follow all instructions meticulously in respect of inoperative accounts,” RBI said.

As per the RBI directive, banks have been advised to carry out special efforts to trace the customers in respect of inoperative accounts.

As per the RBI guidelines, banks are required to pay back the amounts laying in inoperative accounts for ten years or more, along with interest.

They later can lodge a claim for refund from the Depositor Education and Awareness Fund for an equivalent amount paid to the customer/depositor.

Source: Times of India

ATM use over 5 times per month will attract fee of Rs 20 from 1st November 2014

Using ATMs to withdraw money or for other purposes like balance enquiry beyond five times in a month will attract a levy of Rs 20 per transaction from 1st November 2014.

As per the Reserve Bank’s new guidelines that comes into force from Saturday, bank customers in six metros — Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Bangalore — are allowed to withdraw money and/or carry out non-financial transactions like mini-statements at ATMs of banks, where they hold saving/current accounts, free of charge only five times a month.

Every transaction beyond this threshold will be charged Rs 20 per use.

Besides, the number of free transactions at ATMs (Automated Teller Machines) of non-home banks has been cut to three times a month from five times.

“Taking into account the high density of ATMs, bank branches and alternate modes of payment available to customers, the number of mandatory free ATM transactions for savings bank account customers at other banks’ ATMs is reduced from the present 5 to 3 transactions per month (inclusive of both financial and non-financial transactions),” RBI had said in a notification issued in August this year.

The RBI, however, clarified that nothing precludes a bank from offering more than three free transactions at other bank ATMs to its account holders if it so desires.

The cap in the number of free ATM transactions will not apply on small/no-frills or basic savings bank deposit account holders who will continue to enjoy five free transactions.

At places other than the six metro centres, the facility of five free transactions for savings bank account customers will remain unchanged upon using other bank ATMs.

India has a total of 1.6 lakh bank ATMs across the country as of March 2014.

The new guidelines were issued in pursuance of a representation made to the RBI by Indian Banks’ Association on the back of growing cost of ATM deployment and maintenance incurred by banks as well as rising interchange outgo due to free transactions.

Source: The Economic Times