How to reactivate dormant bank account

NEW DELHI: A bank account can turn dormant if not used for two years. When an account turns dormant, the depositor cannot avail of the services associated with it. Banks can mark an account inoperative after a year if a customer fails to respond to the bank’s emails, calls, and letters.

The policy ensures that the money lying in a bank account is not misused. That’s why the regulator has asked banks to “play a more proactive role in finding the whereabouts of the account holders whose accounts have remained inoperative”.

APPROACHING CUSTOMERS

The Reserve Bank of India (RBI) has directed banks to undertake an annual review of accounts which have seen no operations, no credit or debit transactions other than crediting of periodic interest or debiting of service charges. If there are no transactions in an account for more than a year, the banks are supposed to inform customers “in writing” and try to ascertain the reason for it.

If customers have changed bank account because of shifting their house, banks are supposed to take details of the new account where the money from the inoperative bank account can be transferred.

If the customer replies to the bank, it should mark the account as operative and give the customer a year’s time to start operating it. “However, in case the account holder still does not operate the same during the extended period, banks should classify the same as inoperative account after the expiry of the extended period,” according to RBI’s circular.

REGULARISING DORMANT ACCOUNT

Customers need to visit the branch of the bank and make an application to activate the dormant account. A bank can activate a dormant account the next business day or can take more time depending on internal processes and risk category of the depositor.

RBI has allowed banks to regularise customers’ bank account based on the risk category of the account holder. Therefore, banks can allow customers to operate dormant accounts on receiving KYC (know your customer) documents or ask for more due diligence. A bank can ask the customer for verification of signature besides taking the KYC documents.

RBI has asked banks not to levy any charges for the activation of inoperative accounts. Interest on savings bank accounts should be credited regularly whether the account is operative or not.

In fact, if a fixed deposit matures and proceeds are unpaid, the amount left unclaimed with the bank will attract the savings bank rate of interest.

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