Many individuals today maintain multiple bank accounts for various purposes—salary accounts, savings, joint accounts, or even accounts for specific financial goals. However, some of these accounts may remain unused or inactive for extended periods, especially as banking services become more digitized.
If you're among those who have an account that you haven’t used in a while, you might be wondering: What happens if your account stays inactive for a certain period? And more importantly, Is your money safe?
Here’s everything you need to know about dormant accounts:
1. What is a Dormant bank Account?
A dormant account is simply a bank account that has had no transaction activity for an extended period. The specific duration varies across banks, but generally, an account is classified as dormant if there has been no transaction for 2 years or more.
· Inactivity refers to no deposits, withdrawals, or even balance inquiries.
· The bank OF INDIA' target='_blank' title='reserve bank of india-Latest Updates, Photos, Videos are a click away, CLICK NOW'>reserve bank of india (RBI) mandates that banks should mark an account as inactive after 12 months of no activity and dormant after 2 years.
2. What Happens When Your Account Becomes Dormant?
Once an account is classified as dormant, the following things happen:
· Restricted Access: You will no longer be able to use ATM withdrawals, internet banking, or make cheque payments through the account.
· No Debit Card Transactions: If your debit card is linked to a dormant account, you won’t be able to use it for transactions.
· Account services Suspended: The bank may stop sending out account statements, and certain types of transactions, such as online transfers or bill payments, may be blocked.
3. Is My Money Safe in a Dormant Account?
Yes, your money is absolutely safe in a dormant account. The funds in the account continue to be fully protected by the Deposit Insurance and Credit Guarantee Corporation (DICGC), which insures each depositor up to ₹5 lakh for both principal and interest in the event of a bank failure.
The dormancy of an account does not affect the safety of your funds, but you may not be able to access them directly without reactivating the account.
4. How to Reactivate a Dormant Account?
If you wish to reactivate a dormant account, you can easily do so by following these steps:
· Visit the Branch: Visit your bank’s branch where the account is held and provide a written request for reactivation.
· Provide Necessary Documents: Depending on the bank’s policy, you may be required to submit valid identification proof, account details, and possibly proof of address.
· Make a Transaction: In some cases, simply making a deposit or withdrawal from the dormant account can automatically reactivate it.
· KYC Update: If your KYC (Know Your Customer) details are outdated, you may be required to update them as part of the reactivation process.
· Online Options: Some banks allow you to reactivate your account via their mobile banking apps or internet banking, especially if you still have online banking access.
5. Can Banks Charge Fees on Dormant Accounts?
Yes, some banks may charge a fee for maintaining a dormant account. These fees could be:
· Annual Charges: Some banks levy annual maintenance fees if the account remains dormant.
· Service Charges: There may be additional service charges for reactivating the account or for any request to restore ATM or cheque book services.
It’s important to check your bank’s terms and conditions to be aware of any fees associated with dormant accounts.
6. How to Avoid Your Account Becoming Dormant?
To avoid your account becoming dormant, here are some simple tips:
· Conduct Small Transactions Regularly: Make small deposits or withdrawals at least once every year to keep the account active.
· Link Your Account to Recurring Payments: Link your dormant account to recurring payments like utility bills, insurance premiums, or subscriptions. This ensures there’s at least a small transaction every month or quarter.
· Maintain a Minimum Balance: Some banks may consider an account inactive if the balance falls below the minimum required. Ensure you maintain the minimum balance to prevent this from happening.
· Opt for Mobile/Internet Banking: Setting up mobile banking or internet banking and checking your balance or making small transactions will keep your account from becoming inactive.
7. What Happens If I Do Not Reactivate My Dormant Account?
If you do not take action to reactivate your dormant account, there could be further consequences:
· Account Closure: After several years of dormancy, banks may eventually close the account. However, banks usually notify you before closing an account, and you can reactivate it before that happens.
· Inactive Fees: Some banks may charge an inactivity fee after an account becomes dormant. It's a good idea to check with your bank’s specific policy.
Conclusion
While dormant accounts may restrict access to certain banking services, your money remains safe and secure under the DICGC insurance scheme. Reactivating such accounts is generally straightforward, and a few simple steps can restore your full banking privileges.
To avoid dormancy, regularly monitor your accounts and consider automating small transactions to keep them active. If you do find yourself in the situation of having a dormant account, don't worry—it's easy to reactivate, and your funds will be protected.
Disclaimer:
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk..jpg)
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