Opening a bank account is a fairly simple process in today’s time. Due to various reasons, you might have stopped using one or more accounts
that you opened in the past.
Have you ever wondered what happens to such accounts? Or are you searching for ‘dormant meaning in bank account’? Read ahead to know everything about inactive or dormant bank accounts.
What is an Inactive or Dormant Bank Account?
When you leave a bank account unused for more than 12 months, it is considered an inactive account. And when you leave a bank account unused for more than 24 months, it is considered a dormant account.
According to the Reserve Bank of India’s guidelines, an unused account refers to one where you do not make any transactions such as depositing or withdrawing cash, transferring funds, making payments via cheques, etc.
So, if you want to know what is bank account dormant meaning, any inactive account left unused for a prolonged period of time can become dormant.
What Happens to a Dormant Bank Account?
Now that you know ‘dormant meaning in bank account’, are you curious as to why banks classify accounts so?
Banks classify accounts as inactive or dormant to reduce fraud risks. This segregation helps banks keep a check on any kind of misuse with your account.
Here is what happens after your bank account is classified as inactive or dormant -
You will not earn any interest on the funds left in the account.
You will not be able to make use of services like netbanking, ATM transactions, or request for debit cards or cheque books.
In case you have a FD or dividend on your shares, it will be credited as usual. These will be considered as transactions induced by you, which means if they are regularly credited, your account will remain operative.
You will not be able to change or update your mobile number, or address.
If the funds remain unclaimed, the bank is required to transfer the funds to the state’s unclaimed property division.They can be reclaimed by the account holder or their heir.
How to Reactivate a Dormant Bank Account?
The bank will contact you atleast 3 months prior to flagging yout account as dormant. Reactivating an inactive account is much easier and requires you to make some transactions from the bank account. On doing so, the inactive account will be reactivated.
In case the account has already been flagged as dormant, you will have to follow a procedure to reactivate it. It is mentioned below -
Some banks allow reactivation of accounts via internet banking
You can also visit the nearest bank branch or contact the customer support
You might need to give a formal letter to reactivate a dormant account
You might also need to submit your documents and your signature
You may be required to complete the KYC process again
Conclusion
There is no harm in having too many bank accounts as long as you keep a track of all of them, and make regular transactions from each account.
According to the Income Tax rules, you are required to give details of all accounts held by you, no matter what their status. Thus, you must keep a track of all your bank accounts, active, inactive, or dormant.
It is always a good idea to reactivate a bank account while it is inactive and not wait till it is considered dormant. In case it does become dormant, you can still reactivate your account by getting in touch with your bank branch or the customer support.
