SBI Requests RBI to Allow Non-Financial Transactions for Account Activation

Mumbai, Dec 4 (PTI) Faced with the challenge of ensuring an account remains operative, the State Bank of India (SBI) has written to the Reserve Bank, requesting change in rules, and consider non-financial transactions like balance checking as well for tagging an account as operative.

C S Setty, chairman of the country's largest lender, said many a time, an account holder, especially ones where cash transfers under government programmes is the primary usage, does limited number of financial transactions.

After direct benefit transfer, the money gets credited into the account, there are at best two-three debit transactions before it becomes dormant and earns the tag of being inoperative, he said on the sidelines of a bank event late on Tuesday evening.

Even a non-financial transaction should be able to activate the account, Setty said, adding, "We have taken it up with the Reserve Bank of India (RBI)."

He added that the current set of rules focus on financial transactions in a given point of time which result in a lot of accounts getting tagged as "inoperative".

When a customer actually does a non-financial transaction, it is a signal of he or she being "aware" of the bank account and hence there is a case for tagging it as an active account, he said.

The comments come within days of the RBI asking banks to urgently address the issue of inoperative or frozen accounts and also start reporting progress on the same on a quarterly basis to the central bank.

The SBI had also started announcing a special drive on inoperative accounts over the weekend. However, the exact picture on the number of inoperative accounts at the country's largest lender was not known.

Setty said SBI is using its vast branch network of over 22,000 and also the business correspondents to reach out to the inoperative account holders, especially where there is a mobile phone.

On recent comments, including those by Union Finance Minister Nirmala Sitharaman, on potential misselling of insurance covers by banks, Setty said there is a need to make products like insurance, pensions, and mutual funds "self consuming" to allay any concerns.

This can be achieved through easier-to-use mobile interface for buying a product rather than depending on a physical interaction that typically gets done during the customer's visit to a branch for loans, he said.

The SBI chairman made it clear that no stakeholder wants to indulge in misselling of products that banks distribute.

Meanwhile, speaking at the event where SBI felicitated 29 athletes for the laurels they got at the recently concluded Paralympics in Paris, Setty said the country's largest lender is looking at ensuring a better show but added that its efforts will be focused on the differently abled segment.

The bank spends over Rs 630 crore per annum on corporate social responsibility efforts, which is 1 per cent of its net profit.

A bulk of its CSR spends are on skill enablement for people in the rural areas where vocational skills are imparted, he said, adding that it is also tied to business loans to support the enterprising beneficiaries.