From February 1, 2026, a change is set to begin in India’s banking system that may seem simple at first glance but could impact millions of account holders. The Reserve Bank of India (RBI) has instructed banks to identify and begin the process of closing long-dormant and unused zero-balance accounts. This decision was not made suddenly but is a consequence of the growing problem of the countless bank accounts opened in India over the past decade, many of which remain unused.
Government schemes, simplified KYC norms, and the rapid expansion of digital payments have connected almost every adult Indian to the banking system. However, the problem is that while accounts were opened, they were not used regularly. These “dormant” accounts are now becoming a burden on the banking system, and the RBI’s move is aimed at reducing this burden.
Why have unused bank accounts become a problem?
Most people think that if there are no transactions in a savings account, then no one is harmed. There are no loans, no overdrafts, and no pressure to maintain a minimum balance. But for banks, such accounts remain a responsibility even though they are completely inactive. Every account has to be monitored, anti-money laundering rules have to be followed, and security has to be ensured.
The biggest concern is fraud. Cybercriminals often target accounts that are not monitored by the account holder. Long-dormant accounts become easy targets for fraudulent transactions, money laundering, and mule account networks. This is why the RBI is no longer willing to take these accounts lightly.
What constitutes an inactive and dormant account according to the RBI?
According to RBI rules, if no transactions are conducted by the account holder in a bank account for 12 consecutive months, the account is declared “inactive.” This includes no cash deposits, withdrawals, online transfers, or UPI payments. Simply logging into the mobile app is not considered sufficient unless an actual transaction takes place. If this inactivity persists for the next 12 months, the account will be moved to the “dormant” category. In the new 2026 guidelines, the RBI has clarified that automatic entries, such as interest credits or bank charges, do not make an account active. This is an important clarification, as many account holders mistakenly believe their accounts are active.
3 Types of Accounts Included in RBI’s 2026 Clean-up Drive
Under the new RBI rules, banks will primarily focus on three types of accounts. First, accounts that have been inactive for more than 12 months with no activity initiated by the account holder. Second, dormant accounts that have not been used at all for more than two years, even after the bank has sent multiple notifications.
The third category includes zero-balance accounts that were opened but never actually used. Such accounts were often opened in large numbers during mass account opening campaigns. However, zero-balance accounts receiving regular government benefits, pensions, or subsidies will not be closed as long as transactions continue.
What Happens to Your Money if Your Account is Closed?
The biggest fear is that if an account is closed, the money in it will be lost. RBI regulations provide complete protection in this regard. The remaining balance in the account does not remain with the bank but is transferred to the Depositor Education and Awareness (DEA) Fund managed by the RBI.
Although the money remains safe, retrieving it may take some time. The account holder or their legal heir will have to complete the identification and KYC process. Importantly, no interest is earned on the amount after it is transferred to the DEA Fund, which could disadvantage those who claim the money late.
Who Will Be Most Affected?
People living in urban areas who have multiple old or salary accounts may simply see this change as an opportunity for account consolidation. However, the elderly, migrant workers, and rural account holders, who conduct fewer transactions, may be more affected by this change.
For this reason, the RBI has instructed banks to make extra efforts before closing accounts. Phone calls, written notices, and communication in regional languages have been made mandatory. Experts believe that financial inclusion means not just opening accounts, but also keeping account holders engaged.
International Experience and the Way Forward
India is not the first country to take such a step. Countries like the UK and Australia have long had processes in place for reviewing and closing dormant accounts. The RBI has studied the models of these countries and formulated rules tailored to Indian conditions.
In the future, banks may place even greater emphasis on digital identification, nominee registration, and account reviews. While this process might seem slightly inconvenient initially, experts believe it will make the banking system more transparent, secure, and trustworthy.
Final Thoughts
The new RBI rules, effective February 1, 2026, are not merely about account closure; they represent a significant step towards making India’s banking system more secure and efficient. If you haven’t used your bank account for a long time, it would be wise to activate it now.
Staying informed, maintaining contact with your bank, and reviewing your account status regularly is the best way to navigate this change.
Disclaimer:
This article is for general informational purposes only and is based on publicly available RBI guidelines. Rules, timelines, and procedures may vary depending on the bank. It is advisable to contact your bank or a qualified financial advisor before making any decisions.
FAQs
Q. Which bank accounts will be closed from February 1, 2026?
A. Inactive accounts, dormant accounts, and unused zero-balance accounts may be closed under RBI’s new rules.
Q. What makes a bank account inactive or dormant?
A. An account becomes inactive after 12 months without customer-initiated transactions and dormant after 24 months of inactivity.
Q. Will I lose my money if my account is closed?
A. No, any remaining balance is transferred to the RBI’s Depositor Education and Awareness (DEA) Fund and can be claimed later.
Q. Do interest credits keep an account active?
A. No, automatic entries like interest or charges do not count as account activity under RBI rules.
Q. How can I prevent my account from being closed?
A. By making at least one customer-initiated transaction or contacting your bank to reactivate the account before the deadline.
