Banks stop issuing debit cards for dormant accounts

Banks have stopped suo motu issuing debit cards for dormant accounts. “For a bank, it is not prudent to keep servicing dormant accounts. One, the risk of fraud like money laundering increases. And second, there is the cost of maintaining such an account. So, banks have stopped issuing cards suo motu unless approached by the customer,” says Bharat Panchal, CRO, FIS Global, a financial services provider.

But why so many dormant accounts? Banks attribute this to job-hopping by salaried professionals. As young urban Indians switch jobs more frequently, they leave a string of zero-balance salary accounts dormant in their wake.

This fall in debit cards could have been sharper had it not been cushioned by rural India increasing its debit card usage via Jan Dhan accounts.


RuPay cards used by Jan Dhan account holders grew 13.5% year-over-year to 296.8 million as of November 2019 — which increased debit card holding in poor families in India from 75% to 80% in a year.

“While it might be a popular notion that many poor people don’t use Jan Dhan accounts. And government pressure forced bankers to foolishly open thousands of bank accounts, which now remain inactive — it is not so. Numbers show otherwise,” said Mrutyunjay Mahapatra, MD, Syndicate Bank, citing the 13% year-over-year increase to 374.7 million Jan Dhan accounts.