Last updated on October 9th, 2023 at 01:00 pm
Dormant or Inoperative account is a banking term used to denote the account with no operation over a long time.
Thus Dormant or Inoperative Account is not the term you here often. If you are regularly doing transaction in your account your account will not become Dormant.
But if your account is dormant and want it to revive to the active status, read this article completely.
We will give you details on what is Dormant Account and how to reinstate it to the active status.
What is Dormant/ Inoperative Account?
As per RBI directive the Dormant / Inoperative Account is defined as “A savings as well as current account should be treated as inoperative / dormant if there are no transactions in the account for over a period of two years“.
Thus an account becomes inactive if the account holder does not do any transaction including both financial and non financial for more than two years.
The transaction here includes both Credit and Debit entries done by customer or third party in an account.
There may be situation where customer given instruction to credit the interest from term deposit to savings account. These credits also considered Customer induced transactions.
However, the bank induced transactions like debit of Service Charges and Interest Credit are not considered for classifying the dormant account.
Restriction on Dormant Account
If your account becomes dormant the bank will block the debit transaction in the account. Thus you will not be able to withdraw amount from your account.
- The bank will not provide the additional banking facility like debit card, internet banking, etc. to the account as well.
- Though cash withdrawal is not allowed in the account, the deposit to the account by account holder or third party by physically or through online mode is allowed.
- The bank will credit interest for the balance in the account even after the account becomes Dormant.
But to avail other financial and banking tools you must activate your account.
How to Activate Dormant/ Inoperative Account?
It is better to avoid your account becoming Dormant by doing transaction regularly. But for some reason you were not able to monitor and manage your account and the account became dormant.
Do not worry because you can always activate and restate your account to active status by following these steps.
Step 1: Write a request letter to your bank explaining the reason for no operation in the account. And provide a request for activate your account for the present and future transaction.
Step2: Visit the Bank Branch where you hold your account. Also take the Bank Passbook, KYC documents in original as well as photocopy and recent photograph.
Step 2 : Submit the request letter and the KYC documents for verification of your details. Upon verification of your identity the bank official will accept the letter.
Step 3: For activating a Savings/ Current Account it is now mandatory to do customer induced transaction. Thus you might need to make a deposit to your account based on your bank policy.
Step 4: The banks will make your account active after updating the KYC details.
The activation process of your account might take 2 to 3 days. You will receive a notification confirming the activation of your account.
Important Rules on Dormant Account
- For a term deposit account with the auto closure mandate has not been claimed by the customer upon maturity. The maturity amount will earn interest at the savings deposit rate.
- There are no charges levied for Activating Account.
- The minimum balance charges are not levied for the Dormant/ Inoperative Account.
Unclaimed Deposit Accounts
Basnks really do not want to have Dormant Account because it reduces the active usage by the customer. And this will lead to reduction in revenue through various service charges.
Thus banks will provide two intimation before your account becomes Inactive. One at the end of the first year and the second message before three months from account becoming Dormant.
As per RBI rule the bank have to keep the balance in the account for 10 years if there are no operation in the account.
At the end of 10 years amount in the Dormant/ Inoperative account is transferred to Depositor Education and Awareness Fund (DEAF) as per extant RBI guidelines.
Conclusion
There might be several reason for you not being able to operate your account. But the introducing the concept of Dormant/ Inactive account is to protect individuals account.
RBI introduced the restriction on inoperative account to prevent misuse of such accounts.
But it does not affect the customers any way. You can easily activate your account and start using with the simple procedure as explained above.