Do you know that if you haven’t used it for two years, a bank account goes dormant? Yes, you cannot use the services linked with it once it is dormant. Banks consider such an account inoperable after one year in the absence of any reply from customer via emails, calls or letters.
This makes it difficult to misuse the money in a bank account. This is why the regulator has requested the banks “to play a more proactive role in locating the location of the account owners who remain inoperative in their accounts.”
What happens when a bank account becomes dormant?
When a bank account becomes dormant, no services related to the accounts can be used by the user. If an account is not in use and the customer does not reply to the bank’s correspondence, the bank has a right to mark the account as inoperative.
What are the things to know before reactivating a dormant account?
Based on the account holder risk category, the bank may regularise customers' dormant bank accounts.
They may either permit clients to operate inactive accounts when KYC documents are received or request additional due diligence.
In addition to documentation, the banks verify facts and ask for the signature of the account holder.
The holder of the account must know that the inactive bank account is totally free to activate.
What are the consequences of having an inactive or dormant account?
Inactive account holders cannot carry out many operations. A cheque book cannot be issued to you and many more activities, since the restrictions on operations in your account are tighter. The following requests cannot be submitted -
- Change of address
- Signature modification
- Addition or removal of a joint holder
- Renewal of ATM/debit card
- No cash withdrawal from an ATM
- No transactions either through internet banking or a branch of the bank
How to regularise a dormant account?
You must visit the bank's branch and apply to activate the sleeping account. The dormant bank account can be activated on the next working day or may take longer depending on the depositor's internal processes and risk category.
Banks can reactivate the bank account of clients according to the holder's risk level. Under these standards, clients may be able to maintain dormant accounts upon receipt of documentation from your client (KYC). Besides the KYC document, a bank can ask the client to verify the signature.
What are the few transactions to keep an account active?
Try withdrawing cash through an ATM machine or directly from a bank to ensure regular activity from your end.
Make use of net banking facilities from the comfort of your home. It doesn’t matter if you transfer even a small amount of cash.
Deposit a small amount of cash from time to time into your account.
Online bill payments, SIP transactions etc can also help in keeping your account active.
Some important facts!
Recent banks throughout the country have been required by the Reserve Bank of India to conduct an annual evaluation of all not-used accounts over a long period. The banks should inform the consumer in writing and attempt to determine the reason for zero transactions for more than one year.
If the customer has changed the bank account, the bank must contact the customer to record the updated details. The money can be transferred from the dormant account with the data of new bank accounts.
The clients should be aware that the interest on savings bank accounts, whether the account is active or not, needs to be credited on time. The central bank states that if the proceeds are unpaid and the bank’s FD (fixed deposit) matures, the amount remaining unclaimed will attract a savings banking interest rate.