When does a bank account go dormant? Reactivate it at no cost | Business

Feb29,2024



Take inactive bank account, reserve Bank of India (RBI) has rules for inactive bank accounts, Here's an overview of what it means and how to avoid the penalty.
recognizing dormancy
A bank account, whether it is a savings account or a current account, becomes inoperative when there is no Customer Initiated Transactions, both financial and non-financial, for a period not exceeding two years. non-financial transactions This includes actions such as changing transaction limits, requesting a check book or card, or simply checking balances.
notification from bank
Banks are obliged to inform customers about the status of their account if there is no transaction for a year. Notifications can be sent through letter, email or SMS. These alerts serve as a warning indicating that if there is no activity within the next year the account will be classified as 'inactive'.
results of dormancy
Once an account is deactivated, the account holder loses the ability to conduct any transactions, be it financial or non-financial. However, the ET report states that the balance in the account remains safe and interest is earned at regular intervals.
Reactivating inactive bank account
The Reserve Bank of India has simplified the process of activating inactive accounts. You can reactivate it by resubmitting the identity document. For joint accounts, both the holders have to provide their photographs, PAN card, proof of address and proof of identity. Once submitted, the bank will inform you via SMS and email that your account is re-activated based on the KYC documents provided.
charges and penalties
There are no charges for reactivating dormant accounts, and banks cannot impose penalties for not maintaining minimum balance in such accounts. It is important to note that banks still have to pay regular interest on savings accounts, regardless of whether the account is active or not.
handling unclaimed deposit
Money left untouched in a bank account for ten years or more, or unclaimed for the same period, is called unclaimed deposit. After this time, banks transfer these funds to the Depositor Education and Awareness (DEA) Fund maintained by the RBI.
recovery of unclaimed deposits
Money in the deposit account will not be confiscated. Bank branches provide different forms to reclaim unclaimed deposits. There are special procedures that must be followed by the depositor or his nominee/legal heir, especially in the event of death of the depositor. Banks keep records of inactive accounts and unclaimed deposits to facilitate this process.
keeping accounts active
To keep their account active and avoid any problems, it is important for account holders to carry out financial or non-financial transactions regularly, at least once a year. If interest from fixed deposits is credited to your savings account, even if you do not use it for transactions, it will still be considered active.
With inputs from Center for Investment Education and Learning Content that appeared in The Economic Times



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