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Posted on December 14, 2021
Risk of Leaving Your Bank Account Dormant
What is an Inactive or Dormant Bank Account?
If an account holder has not used his savings or current account for conducting any type of transaction for a period of more than 1 year, such account becomes inactive. And 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 for avoiding any such circumstance should use the account for a cash deposit, withdrawal, cheque transactions, or such other transactions.
This is a normal and frequent thing to happen as a person who is holding more than one account usually end up having inactive and dormant account 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?
For keeping 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-keeping it active. Some of the activities which can be termed as customer induced action 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 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 deleting 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 issue of cheque books shall be made.
Other Consequences of holding Dormant Account
Other than the above-specified consequences associated with holding of 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 Polices 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, for conducting 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 the fake documents for completing the KYC norms along with the mobile number as obtained with the help of the bank officials as well. With all this, they also got issued with a duplicate cheque book where the bank officials helped them again. And using this duplicate cheque book they tried transferring the money to a different account from the NRI’s account. But 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 investigating on 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 being 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. For achieving 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 for getting 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 by 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 closing it. The reactivation process differs from one bank to another and on a usual basis, the account gets activated within 24 hours. For this purpose, an account holder needs to make a transaction by cheque or ATM, or debit card. If a person is having 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.
And for renewing or reactivating of an inactive account, the person can submit a duly filled application to the bank furnishing the reason for your non-operation and absence, 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 address proof and valid identity proof for an easy reactivation of a dormant account. And it is to be noted that pertaining to the RBI guidelines, charges for activating dormant accounts cannot be levied from consumers by the bank.