41% families have 1 or more bank accounts they are not able to access online; 60% of those who tried getting online account access restored found bank process bureaucratic & inefficient

September 14, 2023, New Delhi: There are a number of scenarios that may prevent customers from logging in to their bank’s online website or app to access their account to carry out a myriad of banking activities without having to visit the bank. The reasons range from a user forgetting their log in or password details to they not being set up in the first place to the account becoming dormant, etc. As per the Reserve Bank of India (RBI) rules, the account may have become dormant after two years of not having been operated or if the customer has not completed the KYC, which is a mandatory process of identifying and verifying the client's identity when opening an account with the bank. The accounts which have not been operated for over two years have to be segregated and maintained in separate ledgers by the banks, according to RBI. If the balance in the inoperative bank accounts remain unclaimed for 10 years or more, under RBI rules, the entire amount in the savings/ credit account has to be transferred to the central bank’s Depositor Education and Awareness Fund (DEAF). The RBI rules provide for a customer / his or her successor to reactivate the account in both the scenarios by following the laid down procedures.

In April this year, the RBI introduced a new web portal, "Unclaimed Deposits - Gateway to Access InforMation" (UDGAM), to facilitate the return of unclaimed deposits from banks to their rightful owners. It allows individuals to search for unclaimed deposits across various banks in one convenient location. By March 2023, both public and private sector banks had moved approximately Rs 42,272 crore to the Depositor Education and Awareness Fund. Earlier in February, banks had reached out to the central bank with a suggestion to count funds in unclaimed deposits and inoperative or dormant accounts towards the cash reserve ratio, or CRR.

After thousands of issues were reported by banking consumers over the last 18 months ranging from inability to access online banking services to resolving issues where complete account access was shut due to KYC issues, LocalCircles conducted a survey to understand the type and magnitude of the difficulties faced by banking consumers across the country. The survey received more than 31,000 responses from citizens residing in 301 districts of India. 67% of the respondents were men while 33% were women. 44% respondents were from tier 1, 34% from tier 2 and 22% respondents were from tier 3, 4 and rural districts.

41% families have 1 or more individuals with bank accounts that they are not able to access online

Lot of people complain about difficulty in accessing their bank accounts ranging from forgotten credentials to issues with the bank website/apps and from inability to reset credentials online to account being inaccessible for KYC reasons. The first question in the survey asked respondents, “How many of your/family’s existing bank accounts are not accessible online?” In response, 3% said “More than 5”, 8% said “4-5”, 23% said “2-3”, and 3% said “1”. Though 59% of the respondents surveyed said “All accounts are accessible”, the findings suggest that 41% of families have 1 or more individuals with bank accounts which they are not able to access online. This question in the survey received 11,357 responses.

39% families have not been able access 1 or more of their bank accounts online because their credentials are not working; 19% are unable to access because their accounts have “dormant” status

Not all bank customers are internet savvy, which could be among a multitude of reasons bank accounts don’t get operated without the physical presence in the absence of a debit/ credit card. The next question in the survey asked respondents, “Why are you/family unable to access 1 or more of your bank accounts online?” In response, 7% said “Account is in DEAF status, with balance transferred to RBI and we need to reactivate the account”; 12% of citizens said their “Bank has put the account in dormant status and we need to reactivate the account”; 14% said they “Have just not set up account access online but the account is accessible via ATM/Bank”. Notably, 39% of citizens said that though they “Have set up the account online but access credentials are not working”, and 14% said “There is some other issue than the ones described”. Interestingly, no one surveyed said they “Have to do KYC”, while 14% did not give a clear response. This question received 10,386 responses.

60% citizens say that they find their bank bureaucratic and inefficient when approached for re-enabling their/family’s account access online

The final question in the survey asked respondents, “How do you find your current bank when you approach them for re-enabling your/family’s bank account access online?” In response, 23% said their banks were “Quick and efficient when visited”, 5% said it “Has an efficient self-service online/phone system that works”. The majority or 60% of the respondents however indicated that their banks are “Bureaucratic and Inefficient” while 12% did not have an opinion. This question received 9,699 responses.

In summary, the findings of the survey indicate that 41% of families have 1 or more individuals with bank accounts that they are not able to access online. Notably, 39% of families surveyed say that they cannot access 1 or more of their bank accounts online because their credentials are not working, and 19% were unable to access because bank has put their account in dormant status. What is worth noting for the bankers and the regulator RBI is that 60% of citizens in the survey have indicated that their bank is “bureaucratic and inefficient” when approached for re-enabling their/family’s account access online. The survey showcases that it is not enough to promote digital/ online banking if the technical glitches or lack of support from the banks makes the whole process ineffective. Every bank must be required to have the capability for a customer to restore their online account access without visiting the bank. The banks must also find ways of doing KYC validations without the customer actually visiting the branch and all of this must be done without compromising account safety or personal data of users. With Aadhar authentication and services like Digilocker, there should be no reason for the banks to make account holders visit in person. Also, alongside creating awareness among consumers on how to use safe online banking, the banks needs to focus on retraining banking staff, many of whom are not in a position to help customers facing problems while trying to access their accounts online.