Have you lost track of an old savings or current account? Maybe it’s a salary account from a previous job or an account you rarely use. The Reserve Bank of India (RBI) has clear rules on how banks classify such accounts. Under the latest norms, if an account sees no activity for a specific period, it can be marked “dormant.” Here’s what that means, why it matters, and how you can avoid losing access to your funds.
What Does “Dormant Account” Mean?
A dormant or inoperative account is one that hasn’t had any customer-initiated transactions for a fixed period. RBI guidelines say:
If no withdrawal, deposit, cheque, transfer, or internet/mobile banking activity is seen for over two years, banks must classify the account as dormant.
Interest credits by the bank (like savings interest or fixed-deposit maturity) don’t count as “activity.”
Once tagged dormant, the account isn’t closed, but banks impose restrictions like:
Limited or no online banking
Need for fresh KYC to reactivate
No cheque book issuance until reactivation
Why RBI Tightened Dormant Account Norms
To prevent misuse of inactive accounts for money laundering or fraudulent transactions.
To protect customers’ funds by ensuring contact details and KYC remain updated.
To push account holders to keep their banking information current.
Impact on Account Holders
If your account becomes dormant:
You don’t lose your money. Funds remain safe and continue earning interest.
You may face delays accessing funds until you complete reactivation formalities.
Auto-debits or standing instructions may fail, leading to penalties from service providers.
How to Avoid Dormant Status
Make at least one debit or credit transaction initiated by you every 12–18 months (small transfer, UPI, or cheque deposit).
Update your KYC details, mobile number, and email with the bank.
Keep track of old salary or joint accounts and close those you don’t need.
Use the account for recurring payments or small investments to keep it active.
How to Reactivate a Dormant Account
Visit the bank branch or submit a request online if supported.
Provide updated KYC documents (PAN, Aadhaar, address proof).
Perform a small customer-initiated transaction after reactivation approval.
Once reactivated, your account returns to normal status.
FAQs:
Q1. Does a dormant account mean my money is lost?
No. Your funds remain safe and continue earning interest until you reactivate the account.
Q2. How long does an account have to be inactive to be marked dormant?
Two years of no customer-initiated transactions.
Q3. Can the bank close my account without permission?
No. Banks cannot unilaterally close your account without following due notice and process.
Q4. How can I prevent my account from going dormant?
Make at least one transaction or update your KYC periodically. Even a small self-transfer counts.
Q5. Can I reactivate a dormant account online?
Some banks allow it with e-KYC, but many still require an in-branch visit.
Q6. Do fixed deposits linked to my savings account also become dormant?
No. Fixed deposits remain active, but the linked savings account can be marked dormant if unused.
Published on : 19th September
Published by : SMITA
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