If an account holder has not used his savings or current account to conduct any type of transaction for a period of more than 1 year, such account becomes inactive. If this account continues to be inactive for 2 years or more than 2 years, then it becomes dormant or inoperative. Hence, an account holder, to avoid any such circumstance, should use the account for a cash deposit, withdrawal, cheque transactions, or other transactions. This is a normal and frequent thing to happen, as a person who is holding more than one account usually ends up having inactive and dormant accounts due to mismanagement.
In short, the definition of a dormant account is as follows: if your savings bank or current account hasn’t witnessed any transactions, say, credit or debit, except interest, which is credited by the bank, and also the deduction of service charges, for a period more than 1 year, then the account shall be rendered as inactive. On the crossing of 2 years, the account will be declared dormant or inoperative.
What kind of transactions would help you keep an Account Active?
To keep an account active, the customer needs to take up any consumer-induced action and nothing more than that. This would bring in a credit or debit transaction into the account where it is active. Some of the activities which can be termed customer-induced actions are the following:
– Outward bill
– Inward bill
– Transactions conducted through cheque
– Deposit of cash
– Deposit of cash through cheque
– Cash withdrawal or deposit via ATM or Debit card
– Internet banking transaction
– Crediting interest earned as a mandatory payment on the fixed deposit to the Savings Bank Account.
What are the Likely Consequences of having an Inactive or Dormant Account?
An account holder who is holding an inactive or dormant account will not be able to conduct many activities or operations, some of which are listed below:
– Change of address will not be made possible,
– Signature modification will not be possible,
– Addition or deletion of a joint holder is not allowed,
– Renewal of ATM or debit card not possible,
– No cash withdrawal from an ATM is allowed,
– No transactions either through internet banking or a branch of the bank will be allowed,
– No chequebook issues shall be made.
Other Consequences of Holding Dormant Account
Other than the above-specified consequences associated with holding a dormant account or leaving an account dormant would be that the chances of money in your bank account being taken away by fraudsters become high. As per a report which was given by the Delhi Police Cyber Crime Cell, 12 persons were arrested which also included 3 employees of the HDFC bank, pertaining to a trial to conduct fraud.
As per the report, it was stated that the account from which the arrested persons tried to fraud the money was a Non-Resident Indian (NRI), who left his account dormant without conducting any activities in the same.
So, to conduct this, the fraudsters first obtained a SIM card, which was a duplicate of one of the numbers registered with the account, by submitting some fake documents, as the number was not currently used by the NRI.
Using this, they activated the dormant account by submitting fake documents to complete the KYC norms along with the mobile number obtained with the help of the bank officials. With all this, they also got issued with a duplicate chequebook, which the bank officials helped them again. Using this duplicate chequebook, they tried transferring the money to a different account from the NRI’s account. However, as a huge amount was suddenly transferred from such an account, it got flagged by the surveillance system of the bank, which led to the filing of complaints and further investigation of the matter, leading to the arrests.
But one point of stress and something to be noted here is that if the amount transferred was in small amounts instead of such huge amounts, this fraud would have been left unnoticed and not been flagged in the bank surveillance. So, the scope for any such activities must be kept at bay and not occur with respect to your bank account. To achieve this, the following can be done by the individual:
- Update the phone number and email address with respect to every bank account owned by you to get an instant alert.
- Avoid opening many accounts and maintain only 1 or a maximum of 3 accounts at a time.
- Avoid any instance which would lead to turning your account into a dormant account.
- Even if an account is not used constantly, you pass at least one nominal transaction using your account, such that it remains active.
- You can also set a daily limit for the transactions using your account.
How to Reactivate a Dormant Account?
The dormant bank account can be reactivated to either start operating it or close it. The reactivation process differs from one bank to another, and on a regular basis, the account is activated within 24 hours. For this purpose, an account holder needs to make a transaction by cheque, ATM, or debit card. If a person has active accounts other than this, he can send a secured message to the bank in which he is holding the dormant bank account utilizing the Personal Internet Banking ID.
To renew or reactivate an inactive account, the person can submit a duly filled application to the bank furnishing the reason for your non-operation and absence and why you need to renew or reactivate the same now. Banks are very strict and methodical when it comes to verifying customer credentials before reactivation of accounts, and the account holder needs to be physically present by themselves with valid proof of address and valid identity for an easy reactivation of a dormant account. It is to be noted that pertaining to the RBI guidelines, charges for activating dormant accounts cannot be levied from consumers by the bank.
