Have a Dormant Bank Account? Here’s What You Should Know

The young professionals are known to change their jobs frequently in today’s competitive and growing IT industry. However, when you move from one company to another, then you also get a new salary account. Many times, the old bank accounts are forgotten when you start using the new ones. This can make the banks categorize these accounts as “inoperative” or “dormant”.

What is an inoperative bank account?

When a bank account isn’t used for any transaction/service for 2 years, then it’s categorized as an inoperative or dormant bank account. According to the RBI guidelines, this rule applies to both current and savings bank accounts.

Note: An inoperative bank account isn’t actually frozen/cancelled by a bank, it’s just put under some restrictions to protect it from fraudulent activities.

What rules are followed by the banks regarding inoperative bank accounts?

Banks check for transactions before categorizing the bank accounts as inoperative.

The following are some of the activities that are regarded as transactions:

• Withdrawal or deposit of funds by the account holder through ATM, mobile banking, cheques, net banking, etc.
• Funds moved by third-parties such as withdrawal by cheques or deposits through online banking, direct deposits, etc.
• Payment of electricity bill, mobile recharge, etc.

When no valid transaction is registered up to 1 year, then a bank account is declared “inactive”. However, when no transaction is registered for up to 2 years, then it’s declared “inoperative”.

Although banks can impose penalties for the non-maintenance of minimum balance, they can’t charge their customers for reactivating dormant bank accounts. That said, you can’t process certain transactions such as Internet banking, ATM withdrawals, etc. if your account is dormant.

How do you make a dormant bank account an active bank account?

Even if your bank account’s status has been changed to “inoperative”, you can reverse this within 24 hours. All you have to do is submit an application to the bank along with your ID and passbook. You may need to complete a KYC process too, but it should not take long and in 24 hours your account’s status will change back to “active”.