The Reserve Bank of India (RBI) — the country’s central banking authority — is rolling out a set of updated banking regulations that affect the status of long‑unused accounts. Under the new norms coming into effect in early 2026, several categories of accounts that lie dormant, inactive, or unutilised for long periods may be permanently closed by banks unless customers take action.
This directive is part of RBI’s effort to strengthen governance, reduce fraud risk, streamline operations, and ensure that all accounts in the banking system are genuinely used and traceable. For many customers, these changes could mean that an old savings account, zero‑balance account, or unused account you forgot about may no longer exist by the end of January or early February 2026 — unless you prevent its closure.
Below, we explain which accounts are at risk, why the RBI is introducing these changes, and what every account holder should know before January 20, 2026.
1. Dormant Bank Accounts
A dormant bank account is one that has had no customer‑initiated transactions for a prolonged period — typically 24 months or more. Banks may classify such accounts as dormant when they haven’t seen any action, such as deposits, withdrawals, transfers, or customer‑initiated activities.
Under the new rules:
- If a bank account has remained dormant for more than two years, it may be marked for closure by the bank after giving appropriate notices to the customer.
- Interest may have continued to accrue, but the lack of activity raises concerns about misuse, identity issues, and fraud. Banks are now being instructed to review these accounts and act.
Why this matters: Dormant accounts are disproportionately targeted by cybercriminals because they are rarely monitored by customers. The RBI’s intent is to reduce the number of such accounts in banking systems where unauthorized activities can go unnoticed.
2. Inactive Bank Accounts
Inactive accounts are slightly different from dormant accounts. An account may be classified as inactive when no customer‑initiated transaction occurs for at least 12 months.
Transactions eligible for counting toward activity include things initiated by you — such as:
- Cash deposits
- Withdrawals
- Fund transfers
- Cheque transactions
- Digital payments
- Balance inquiries initiated by you (in some classifications)
Importantly, automatic credits like interest or government subsidies do NOT count as customer‑initiated activity.
What the new rules say:
- Banks may close inactive accounts if no action is taken by the customer to reactivate them before the deadline.
- These closures are meant to reduce the number of “dead” accounts that have no real owner engagement, lowering risks and operational costs.
Impact on customers: Many of us may have older savings accounts opened years ago and then forgotten — especially student accounts, old salary accounts, or accounts opened during financial inclusion campaigns. If these remain unused, they could now be flagged for closure.
3. Zero Balance Accounts with No Activity
Zero balance accounts — commonly opened under schemes like Basic Savings Bank Deposit (BSBD) accounts or for specific purposes such as government benefit transfers, wages, or pension credits — often remain unused once their immediate purpose is fulfilled.
Under the updated norms:
- Zero balance accounts with no transaction history or activity over an extended period are eligible for closure.
- Banks will generally notify customers before taking action, giving them an opportunity to reactivate the account if needed.
- However, accounts that continue to receive regular credits — such as pensions, subsidies, or welfare payments — are typically exempt from automatic closure.
These changes particularly affect older zero‑balance accounts that were opened for seasonal needs or occasional use and have simply remained inactive.
Why the RBI Is Updating These Rules
RBI’s new rules — effective from January 20, 2026 and extending into early February 2026 in some reports — are not aimed at penalising customers but at strengthening the integrity and safety of the banking system. Several key reasons behind this decision are:
Preventing Misuse and Fraud
Inactive and dormant accounts can become targets for fraudsters who exploit forgotten or unmonitored accounts to launder funds or conduct unauthorized transactions.
By reducing the number of unused accounts, banks can better monitor activity and identify suspicious patterns more easily.
Operational Efficiency
Banks maintain millions of accounts in their systems. Accounts that lie unused create administrative overhead for banks, complicate KYC compliance processes, and clutter databases.
Cleaning up such accounts allows banks to focus on genuinely active customers and services.
Improving Customer Protection
Inactive accounts may not receive KYC updates, address changes, or security reviews. Removing such accounts from active systems ensures that only accounts with up‑to‑date details are maintained.
Enhancing Financial Inclusion Goals
Most zero‑balance accounts were created as part of inclusion initiatives. The updated rules are designed not to undo inclusion, but to ensure that accounts still serve their intended purpose.
What Happens When an Account Is Closed?
One common fear among customers is that their money will simply disappear if an account is closed — but that’s not the case under RBI norms:
Funds Are Not Lost
Balances from closed accounts are transferred to the Depositor Education and Awareness (DEA) Fund maintained by the RBI.
This means:
- Your money remains safe.
- You (or your heirs) can claim the funds later — though you may need proper documentation and verification.
However, the process of reclaiming funds can be time‑consuming and require proof of identity and past ownership, so it’s better to keep the account active if you intend to use it in the future.
How to Prevent Account Closure
If you discover that one of your bank accounts might be at risk, you can take a few simple steps to keep it active:
1. Perform a Transaction
A single customer‑initiated transaction — such as a small deposit, withdrawal, or transfer — will usually reset the inactivity clock and prevent the account from being flagged as inactive or dormant.
2. Update KYC Details
Make sure your KYC (Know Your Customer) information — such as Aadhaar, PAN, address, and mobile number — is current with the bank. Verified KYC ensures better tracking and communication.
3. Link Active Services
If your account is linked to regular credits — like salary, pension, or government subsidies — it often stays active automatically.
4. Supersede Zero Balance Status
If you want to keep a zero‑balance account open for future use, consider making occasional transactions even if you don’t use it regularly.
What Customers Should Do Before January 20, 2026
With these changes in mind, account holders should take a few proactive steps:
- Review all your bank accounts — including old salary accounts, student accounts, and zero‑balance accounts you may have forgotten.
- Check recent activity — any transaction in the past year can help keep an account active.
- Make at least one transaction before the deadline if an account shows no activity.
- Update KYC at your bank branch or through digital banking channels.
- Monitor bank communications — banks are expected to send SMS, emails, or letters if accounts are at risk.
Final Thoughts
RBI’s new rules on closing certain long‑unused bank accounts from early 2026 are part of a broader effort to improve security, reduce fraud risk, and enhance the operational efficiency of India’s banking system. While the prospect of losing an old account can be concerning, the steps to retain activity and protect your funds are straightforward.
With timely action — such as making a transaction or updating KYC — you can ensure your accounts remain active, your funds stay within your reach, and your banking relationship continues uninterrupted in the years ahead.