Page 7 - Banking Finance July 2025

RBI CORNER

RBI simplifies access to

dormant accounts and
unclaimed deposits
The Reserve Bank of India has issued
new guidelines to make it easier for
customers and heirs to reactivate dor-
mant accounts and claim unclaimed
deposits. Under RBI norms, if a savings Ò»©­
or current account remains inactive for
10 years, or if deposits remain un-
claimed for the same period, they are
classified as "inoperative" and trans-
ferred to the Depositor Education and
Awareness (DEA) Fund.
RBI to end daily VRR auctions amid surplus liquidity
Earlier, reactivation required a physical
The Reserve Bank of India (RBI) has announced that it will discontinue its
visit to the home branch and lengthy
paperwork. The new rules now permit daily variable rate repo (VRR) auctions starting June 11, 2025, citing im-
KYC updates at any branch and also al- proved liquidity conditions in the banking system. Introduced on January 16,
low banks to use Video-based Cus- 2025, the VRR auctions served as a short-term funding mechanism for banks
during a liquidity crunch.
tomer Identification Processes (V-CIP).
Banks may additionally use authorised With the return of surplus liquidity, the RBI deemed the daily auctions un-
Business Correspondents to assist cus- necessary. VRR operations had allowed banks to borrow funds at variable
tomers in completing KYC formalities. rates against government securities, helping manage short-term mis-
matches. The withdrawal of these daily operations indicates a shift in mon-
The move aims to streamline the claim
etary conditions, as the central bank calibrates its liquidity management
process and offer greater flexibility for
users seeking access to forgotten funds, framework.
especially elderly or rural customers Market participants are now expected to rely more on the RBI's standard
who faced difficulty accessing their ac- liquidity adjustment facility (LAF) operations. The move signals RBI's confi-
counts under the earlier process. dence in the stability of systemic liquidity, offering clarity on the central
bank's evolving stance in response to the macroeconomic environment.
Banks reduce lending
rates following RBI's 50 Karur Vysya Bank also announced down- RBI's record Rs 2.7 lakh
ward revisions. However, these banks
bps repo rate cut have kept their marginal cost of funds- crore dividend boosts govt
In response to the Reserve Bank of based lending rate (MCLR) unchanged. finances: SBI
India's recent 50 basis point cut in the These rate adjustments are in line with The Reserve Bank of India's unprec-
repo rate, several public sector banks RBI's monetary policy aimed at boost- edented dividend of Rs 2.7 lakh crore
have announced reductions in their ex- ing credit growth and economic activ-
for FY25 is expected to significantly
ternal benchmark-linked lending rates. ity amid moderating inflation.
bolster the Centre's fiscal position, ac-
Punjab National Bank (PNB) has revised The reduced RLLRs are expected to cording to SBI Research. The payout,
its repo-linked lending rate (RLLR) from lower EMIs for home, auto, and per- which exceeds the Rs 2.56 lakh crore
8.85% to 8.35%, effective June 9. sonal loans, offering relief to retail and budgeted from the RBI and other pub-
Bank of Baroda (BoB) similarly cut its small business borrowers. This signals lic institutions for FY26, gives the gov-
RLLR to 8.15% starting June 7, 2025. a positive move towards an easing in- ernment a notable fiscal buffer.
UCO Bank, Bank of India (BoI), and terest rate environment. SBI's Ecowrap report forecasts a poten-

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