Module: | KYC, NPAs, Advances & Investment Valuations
Q217: Consider the following statements regarding the operational management and activation of inoperative accounts:
1. If a customer responds to an inoperative warning alert with valid reasons for non-operation, the bank must classify the account as operative for an 'extended period' of one more year.
2. The financial amounts lying in inoperative accounts and unclaimed deposits must be subjected to a mandatory concurrent audit.
3. A bank is permitted to allow automated bank-induced debit transactions in an inoperative account to recover administrative maintenance charges.
4. Upon the successful activation of an inoperative account, the bank may impose a cooling-off period and must automatically intimate the account holder via SMS or email.
Which of the statements given above is/are correct?
2. The financial amounts lying in inoperative accounts and unclaimed deposits must be subjected to a mandatory concurrent audit.
3. A bank is permitted to allow automated bank-induced debit transactions in an inoperative account to recover administrative maintenance charges.
4. Upon the successful activation of an inoperative account, the bank may impose a cooling-off period and must automatically intimate the account holder via SMS or email.
Which of the statements given above is/are correct?
✅ Correct Answer: C
The correct answer is C. Statement 1 is correct: The regulations state that if a customer provides valid, documented reasons for the lack of transactions following a warning alert, the bank must grant an 'extended period', keeping the account officially classified as operative for one additional year.
Statement 2 is correct: The framework introduces a stringent internal oversight mechanism, requiring that all amounts lying in inoperative accounts and unclaimed deposits be subjected to a mandatory concurrent audit to prevent internal fraud.
Statement 3 is incorrect: The guidelines strictly prohibit banks from allowing any debit transactions (including administrative or bank-induced charges) in an inoperative account unless there is a customer-induced activation.
Statement 4 is correct: The mandate requires immediate communication (via SMS or email) upon removing the inoperative status, and explicitly permits banks to implement a cooling-off period post-activation to aggressively monitor for suspicious activity.
Statement 2 is correct: The framework introduces a stringent internal oversight mechanism, requiring that all amounts lying in inoperative accounts and unclaimed deposits be subjected to a mandatory concurrent audit to prevent internal fraud.
Statement 3 is incorrect: The guidelines strictly prohibit banks from allowing any debit transactions (including administrative or bank-induced charges) in an inoperative account unless there is a customer-induced activation.
Statement 4 is correct: The mandate requires immediate communication (via SMS or email) upon removing the inoperative status, and explicitly permits banks to implement a cooling-off period post-activation to aggressively monitor for suspicious activity.