Review of Dormant Accounts--Financial Inclusion

The directive issued by RBI to banks to undertake annual review of inoperative accounts and inform the same to customers concerned is indeed a welcome initiative.This instruction of RBI if properly implemented will go a long way in achieving real and meaningful financial inclusion.
Many customers with Little or no financial literacy are scared to go to the banks and ascertain the position of their accounts as they have the fear that banks may ask them to pay some money towards shortfall in minimum balance charges.Many such old accounts are yet to to be treated as no-frills accounts.Banks must do away this fear on the part of inoperative account holders.If this is done most of them may resume operations in the accounts.Some have opened accounts for encasing account payee cheques drawn in their favour.After getting the cheques encased they have forgotten the account.They may be made to start operations in the account through proper follow-up and motivation..
Banks must educate all dormant account holders to make use of the accounts and resume operations for their own benefit.Banks usually ignore such accounts for fear of extra work.A process of education will surely encourage all dormant account holders to make use of their accounts.Banks may follow the strategy adopted by Dr.T.M.A.Pai in the initial years of Syndicate Bank.He never allowed account holders to have a gap in operations.He used to monitor and send word through Pygmy agents to come and meet him or the bank manager .He used to exhort such dormant account holders to operate the account at least once a month by depositing Rs5 or any small amount.This way he developed banking habit and saving habit among people in Udupi and Dakshina Kannada districts.Today these districts are having adequate banking habit among people.This strategy can be replicated so as to achieve meaningful financial inclusion in lieu of present statistics -oriented ritual of financial inclusion.
Banks must view RBI fiat as an opportunity for bringing those nominally brought in to banking fold in the past and now having dormant accounts to achieve their real and meaningful financial inclusion.They must be made to resume relationship and enjoy the relationship.The directive to pay interest on such accounts can serve as an incentive for dormant account holders to start operations in the account.The annual review may afford an excellent opportunity for banks to build up relationship with dormant account holders bring them back in to their fold and get business from them now on.If this is done financial inclusion can be real and meaningful for both banks and customers..It is possible that many of the dormant account holders might have improved their economic lot now.Banks can get better business from them if their economic condition has improved.
Banks must as a fine gesture reverse minimum balance charges debited if any to all such accounts and treat all such accounts as no frills accounts to encourage and motivate dormant account holders.Banks can launch special campaigns for reviving dormant accounts as LIC is doing in respect of lapsed life policies.Efforts at promotion of financial literacy promotion of ,savings habit and ,banking habit etc can also be made by banks.The proposed FLCCs can also attend to this task once they are set up.