What do you need to know about dormant account?

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Many people these days manage multiple bank accounts. Some open more than one account for different purposes. Sometimes, while changing jobs, a new bank account is opened. In such cases, there is a possibility that you may forget about the account that you had opened with your previous organisation. If you have a savings or current bank account, and you haven’t made any transactions for more than 12 months, the account is considered inactive.

A savings or current account is considered dormant or inoperative when there have been no transactions through that account for more than 24 months, i.e., 2 years. If you haven’t deposited or withdrawn money from it for more than 2 years or haven’t made any transfers through IMPS, NEFT, RTGS, or UPI, the account will be deemed dormant or temporarily closed.

In this case, the bank will not consider interest credit and deduction of charges  as transactions. However, if interest is being credited to the account from a fixed deposit (FD), it is considered a Customer Induced Transaction, indicating activity initiated by the customer.

Banks inform their customers about an account becoming dormant. According to the information provided on the Bank of Badoda’s website, the bank reviews all savings and current accounts every year. If an account has not had any transactions for more than a year, it is necessary for the bank to inform the customer through letters, emails, messages, phone calls, or other means. The bank inquires about the reason for not using the account. It would advise the customer to deposit or withdraw money to keep the account active. If you follow the advice and conduct a transaction, your account will become active. If the bank does not receive a response from you. And if the account remains inactive, the bank will consider it dormant if two years have passed.

Despite being inoperative or dormant, you would continue to get interest credit on the deposited amount. When the account becomes dormant, the account holder cannot perform any transactions. These transactions include deposits and withdrawals. However, this does not mean that the money in the account is lost.

To activate your bank account from ‘dormant’ condition, the account holder needs to visit the bank branch. An application must be submitted to the bank officer with the passbook and checkbook. You will have to explain why the account has not been in use for so long. Additionally, a KYC update is required, including address proof, ID proof, and photos. After submitting the documents within 2-3 working days, the account will become active.

Similar to Ajit, if you also have a bank account that has been inactive for a considerable period, you can get it reactivated.  Once the account is active, you can withdraw money or keep the account active. You don’t have to pay any charges to activate a dormant account.  If your account is with Punjab National Bank, the public lender has conducted a special campaign to activate dormant accounts from October 2nd to October 31st. After the account is active, be sure to conduct at least one transaction in it every year.