India’s Dormant Bank Accounts: An Untapped Economic Force?

Fresh Insight: Explore the macroeconomic and financial inclusion implications of over Rs 78,213 crore lying in dormant accounts.

Ira Singh
 Khabar Khabaron Ki,April 15, 2025

What if we told you there’s more than Rs 78,213 crore just sitting idle across India’s banking system—untouched, unnoticed, and unproductive? Imagine the possibilities if even a fraction of that capital found its way back into active circulation. Could this be India’s next financial inclusion revolution?

According to the latest figures released by the Reserve Bank of India (RBI), dormant accounts—those without customer-initiated transactions for over two years—now hold a staggering Rs 78,213 crore. Public sector banks account for nearly 95% of these funds, with the State Bank of India alone carrying over Rs 8,000 crore in dormant balances. That’s not just spare change—it’s equivalent to nearly 10% of India’s annual outlay on rural employment schemes.

A Sleeping Giant in India’s Financial System
From a macroeconomic lens, this isn’t just about unclaimed money—it’s about missed opportunity. Dormant accounts represent a paradox: the formal inclusion of individuals into the banking network, but without true financial engagement.

Financial analysts argue this pool of idle funds could serve as a “shock absorber” or liquidity buffer in times of systemic stress. “If mobilized properly, these resources could supplement low-cost deposit bases for banks and enhance credit flows to MSMEs,” says Meenal Kulkarni, a senior economist with a leading brokerage firm.

But why are these accounts lying dormant? Experts point to migration, lack of financial awareness, and the absence of digital tools for re-engagement. So, the real question is: What can we do to awaken these sleeping balances?

Dormant accounts reflect inclusion without empowerment—millions of accounts opened under financial inclusion schemes, yet lacking meaningful usage. This contradiction undermines the very goals of India’s digital finance revolution.“If mobilized effectively, this pool could act as a liquidity backstop—particularly in supporting MSME lending or stabilizing credit flows during monetary tightening,” says Meenal Kulkarni, Senior Economist at Monarch Capital Advisors.

Technology and Nudges: A Potential Game- Changer
The Unified Payments Interface (UPI) revolution has transformed how India transacts. Could a similar digital disruption reactivate dormant accounts?

RBI’s push for KYC-linked digital touchpoints and AI-based customer nudges might just be the key. Imagine receiving a prompt through your Aadhaar-linked mobile number saying, “Did you know you have Rs 3,000 lying unused in your old Jan Dhan account?” A simple click could reactivate it, bringing both transparency and mobility into the system.

These nudges, especially when available in regional languages and voice commands, can make banking accessible even to first-time users or senior citizens.Fintech platforms are already piloting reactivation features via biometric authentication and SMS-based prompts for rural users. Neobanks are experimenting with auto-prediction models that trace forgotten balances and guide users on how to reclaim or consolidate them.

Global Perspectives: Lessons from Japan and the U.S.
India is not alone in facing this phenomenon. Japan’s postal savings system has long grappled with trillions of yen in dormant deposits, prompting government interventions to use the funds for public investment. Similarly, the U.S. holds over $70 billion in unclaimed assets, managed by state treasuries under escheatment laws.

India could take cues from these models. A centralized digital registry of dormant balances, public awareness campaigns, and cross-sector partnerships could mirror global best practices. Could we see the emergence of a “National Dormant Funds Authority” in the next Union Budget?

A Call to Action or a Missed Opportunity?
The Rs 78,213 crore question is this: Can India turn its dormant accounts into an engine of growth and inclusion? The answer lies in a blend of policy, technology, and behavioral change. Financial inclusion cannot end at opening accounts—it must empower people to use them meaningfully.

So, we ask you: Do you know if any of your family’s bank accounts have gone dormant? Could that unused balance be the key to someone’s next microloan, insurance premium, or child’s tuition fee?

As India chases its $5 trillion economy dream, no rupee should be left behind. Perhaps it’s time to wake up to what lies asleep in the vaults

Source: The RBI’s 2024-25 data (published in March 2025), which shows a significant rise in unclaimed deposits, up from Rs 62,225 crore the previous year.