State Bank of India plans to close inoperative savings accounts with zero balances to curb cyber frauds. The bank said, "Inoperative accounts pose risks to both customers and banks as they can be misused." Customers must update KYC details within a month to keep their accounts active and avoid closure.
State Bank of India plans to close inoperative savings accounts with zero balances to prevent cyber fraud and misuse as mule accounts, requiring KYC updates within a month's notice.
State Bank of India (SBI), the country's largest lender, plans to close inoperative savings accounts with zero balances to curb cyber frauds and prevent their misuse as mule accounts for routing illicit funds.
The move comes amid growing concerns over fraudsters using dormant bank accounts as mule accounts to receive, transfer and conceal money stolen through cybercrime.
SBI has informed customers that inoperative savings accounts carrying nil balances for more than a year will be closed after a month's notice if their Know Your Customer (KYC) details are not updated during the notice period. No further intimation will be issued before closure.
Under banking regulations, an account is classified as inoperative if there are no customer-initiated transactions for more than two years. Customers seeking to reactivate such accounts can visit any SBI branch with the necessary KYC documents or update their details through digital channels such as YONO.
A senior SBI executive said the exercise is driven by two considerations -- safeguarding customers against potential fraud and reducing the cost of maintaining dormant accounts.
"Inoperative accounts pose risks to both customers and banks as they can be misused. There is also a cost involved in maintaining these accounts. The objective is to manage these risks and costs without inconveniencing genuine customers," the executive said.
The bank has already developed a dashboard to monitor non-funded savings accounts and facilitate the reactivation of inoperative accounts with balances exceeding Rs 10,000.
Dormant accounts have increasingly emerged as a vulnerability in the banking system. Fraudsters often exploit such accounts as conduits for moving stolen money, making it difficult for investigating agencies to trace the ultimate beneficiaries.
According to government data released by the Press Information Bureau, the Indian Cybercrime Coordination Centre (I4C) has shared details of 2.64 million first-layer mule accounts with banks and enforcement agencies.
Separately, investigations such as the Central Bureau of Investigation's (CBI) Operation Chakra-V have uncovered an extensive network of suspected mule accounts. The operation identified around 850,000 accounts spread across more than 700 bank branches.
SBI's move also comes at a time when the lender disclosed a data breach involving customer information. In a stock exchange filing on October 21, SBI said it had identified 3,897 customer records containing personal information among data exposed on the dark web.
The bank had received alerts about the suspected exposure on October 16 from its threat intelligence service provider, the Defence Cyber Agency and the Indian Computer Emergency Response Team (CERT-In).
The compromised information reportedly included customer names, registered mobile numbers, dates of birth, email addresses, residential addresses, gender, customer identification numbers (CIF) and lead IDs.
Following the alerts, SBI activated its cyber incident response and containment protocols. It also appointed an independent cybersecurity agency empanelled by CERT-In to investigate the incident and determine the nature and extent of the suspected compromise.
The bank has maintained that the incident has had no material impact on its core operations, financial performance or business continuity.