State Bank of India (SBI) plans to close inoperative savings accounts carrying zero balances if customers fail to update their Know Your Customer (KYC) details within a one-month notice period. The move is aimed at preventing dormant accounts from being misused by cybercriminals to receive and transfer fraud proceeds.
The bank has informed customers that accounts remaining inoperative with nil balances for more than a year will face closure after the notice period if the required KYC updates are not completed.
Why Is SBI Closing Dormant Accounts?
The decision follows growing concerns about dormant bank accounts being exploited as mule accounts, which fraudsters use to move stolen money through the financial system.
A senior SBI executive said the exercise has two objectives: protecting customers against potential fraud and reducing the cost of maintaining inactive accounts.
The bank intends to manage these risks without inconveniencing genuine customers.
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Which Accounts Could Face Closure
Under banking regulations, an account is classified as inoperative when there have been no customer-initiated transactions for more than two years. SBI’s proposed closure exercise targets inoperative savings accounts with zero balances and incomplete KYC updates.
Customers can reactivate their accounts by visiting an SBI branch with the necessary documents or updating their information through digital channels such as YONO.
How Are Mule Accounts Used in Cybercrime?
Dormant accounts can become channels for receiving, transferring and concealing money obtained through cyber fraud. Such transactions complicate investigations by making it harder for enforcement agencies to trace stolen funds and identify their ultimate beneficiaries.
The Indian Cybercrime Coordination Centre (I4C) has shared details of 2.64 million first-layer mule accounts with banks and enforcement agencies.
What Have Investigations Revealed?
The Central Bureau of Investigation’s Operation Chakra-V uncovered an extensive network of suspected mule accounts. Investigators identified approximately 850,000 accounts spread across more than 700 bank branches.
These findings underline the scale of account misuse confronting banks and law enforcement agencies.
SBI has also developed a dashboard to monitor non-funded savings accounts and facilitate reactivation of inoperative accounts holding balances above ₹10,000.
What About SBI’s Recent Data Breach?
The account closure initiative comes alongside a separate cybersecurity concern involving customer information.
In an October 21 stock exchange filing, SBI disclosed that 3,897 customer records containing personal information had been identified among data exposed on the dark web.
The information reportedly included names, registered mobile numbers, dates of birth, email addresses, residential addresses and customer identification details.
What Action Has SBI Taken?
SBI received alerts about the suspected exposure on October 16 from its threat intelligence provider, the Defence Cyber Agency and CERT-In. The bank activated its cyber incident response protocols and appointed an independent cybersecurity agency empanelled by CERT-In to investigate the suspected compromise.
SBI maintained that the incident had no material impact on its core operations, financial performance or business continuity.
The420 Insight
SBI’s planned account closures highlight the growing importance of monitoring inactive banking relationships as part of cyber fraud prevention. Stronger account verification and mule account detection could help restrict channels used to move illicit funds.
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