RBI's New Rules – What Changed and Why
From January 1, 2026, the Reserve Bank of India (RBI) rolled out revised norms empowering banks to actively review, flag, and where necessary close dormant, inactive, and zero-balance accounts, as part of a broader effort to strengthen banking security, improve transparency, and reduce fraud.
Under RBI's classification, an account is treated as dormant if it has recorded no deposits or withdrawals for two years or more. Such accounts are considered higher-risk since they are rarely monitored by their holders and are therefore more susceptible to fraudulent misuse, including unauthorised transactions and money-laundering attempts.
Banks have been directed to proactively identify these accounts and reach out to customers before initiating closure or restricting access.
What Customers Need to Do
To avoid disruption, account holders have been advised to ensure their Know Your Customer (KYC) details are updated and to carry out at least periodic transactions to keep their accounts classified as active.
The reform sits within a wider package of banking-sector governance changes introduced through the Banking Laws (Amendment) Act, 2025, which enhanced depositor and investor protection, improved audit quality in Public Sector Banks (PSBs), streamlined nomination procedures, and shifted certain statutory reporting responsibilities from banks directly to the RBI.
Alongside these regulatory measures, PIB also flagged rising instances of WhatsApp-based scams falsely claiming accounts would be blocked unless customers shared personal details — underscoring why genuine RBI-mandated dormancy rules must be clearly distinguished from fraudulent messages circulating on social media and messaging platforms.
For competitive exams, remember the two-year dormancy threshold, the effective date of January 1, 2026, and the enabling legislation, the Banking Laws (Amendment) Act, 2025, all of which are common one-liner questions in banking-awareness sections.
Source: pib.gov.in
