Life gets busy, and amidst the hustle and bustle, you unintentionally overlook your bank account for an entire year. We have all been there, but have you ever wondered what happens when you don’t transact on your bank account for an extended period?
Let’s figure out what happens to your account when you leave your savings account sit idle for over a year.
What are dormant accounts?
When you don’t make any transactions on your bank account for an extended period, it becomes classified as a “dormant account.” Each bank has its rules regarding dormant accounts. Still, an account is generally deemed dormant if no customer-initiated transactions occur for 12 months.
Once your account becomes dormant, it doesn’t mean your funds disappear or get forfeited. Indian banks have policies in place to protect your money. To reactivate a dormant account, you typically need to initiate a transaction, such as depositing or withdrawing money. This activity serves as a signal to the bank that you are actively using the account.
Repercussions of neglect:
If you fail to reactivate your dormant account within a specific period, usually two years, it may transition into an “inactive account” status. At this stage, certain limitations and restrictions may apply. For instance, you may lose access to certain banking services, such as Internet banking or ATM withdrawals. It is essential to stay informed about your bank’s specific policies to avoid any inconveniences.
Account reactivation process:
To reactivate an inactive account, you will need to visit your bank’s branch and follow the necessary procedures. This typically involves submitting an account reactivation request, providing identification documents, and completing any other formalities as your bank requires. Once your account is reactivated, you regain full access to its services and functionality.
In rare cases where an account remains dormant or inactive for an extended period without customer-initiated activity, and the account holder cannot be reached, the account may be classified as “unclaimed.”
Unclaimed balances are subject to guidelines provided by the Reserve Bank of India (RBI). The RBI mandates that banks transfer unclaimed funds to the Depositor Education and Awareness Fund (DEAF) after a specified period.
Safety measures and legal protection:
Banking regulations prioritize customer protection and safeguarding their assets. Banks are required to inform account holders before their accounts become dormant or inactive.
They must also make reasonable efforts to notify account holders regarding unclaimed funds. These measures ensure transparency and allow customers to reactivate or claim their funds.
What are the preventive measures?
To avoid the hassle and potential loss associated with dormant accounts, there are a few preventive measures you can take. Firstly, ensure you have provided your updated contact information to the bank, including your phone number and email address.
Regularly monitor your account statements and be mindful of any communication from your bank. If you anticipate a period of inactivity, consider setting up automatic transactions, such as utility bill payments or fixed deposits, to keep your account active.
To wrap up
It’s easy to overlook your bank account when it becomes dormant due to inactivity. However, understanding the consequences and taking necessary actions can secure your hard-earned money.