Money & Banking

With SBI blocking tiny accounts, social-security beneficiaries in a fix

LN Revathy Coimbatore | Updated on January 11, 2019 Published on January 11, 2019

State Bank of India is understood to have blocked the withdrawal of money from several tiny accounts in this region, which has put the economically weaker sections in deep trouble.

Bank sources, while admitting the issue, could not quantify the number of accounts that have been blocked. They maintained that the issue is being addressed. Sources reasoned that the accounts were blocked as they did not comply with KYC norms; there were also a few instances of duplication, as some of the account-holders held more than one account.

Such accounts were opened by business correspondents by bringing those in unbanked areas into the banking fold. Initially, ‘no frills’ accounts with simplified KYC (Know Your Customer), were opened for these customers, and subsequently, they were allowed to operate only on KYC compliance after two years. Tiny account holders are mostly covered under social-security schemes such as old-age pension, national rural employment scheme, and financial assistance to the physically challenged, among others.

Such people have not been able to withdraw pension or assistance that the government provides. Sources said the bank took a unilateral decision to convert all tiny accounts into special tiny accounts, blocking the operations of tiny accounts. The conversion process is said to be tedious and could be done at the home branch.

Terming the conversion as a hasty move, Coimbatore Consumer Cause has, in a communication to the chairman of the bank, condemned the unilateral blocking of such accounts and the undue hardship the beneficiaries are being subjected to.

When asked to respond to the blocking of tiny accounts, PK Gupta, Managing Director (Retail and Digital Banking), SBI, said he was unaware of the issue and would look into it.

Published on January 11, 2019
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