What is an inoperative/dormant bank account?

Any account (savings or current) in which there is no transaction for a period of two straight years is considered as inoperative account. In such kind of dormant account, no further transactions can be carried out by the account holder as per RBI’s rule.

There could be many reasons why an account can become inoperative:

• Person holds too many account and forgets to use.
• Account holder is out of country and feels no need to make the use of account in India. OR
• No longer uses the bank’s service but continues to keep the account. OR
• Passes away and their legal heirs are not aware of his/her bank account
• Goes missing

But what if the account holder wants to re-activate the account? Is it possible?

Answer is YES. And here’s how:

File a written application: Once you confirm that your account has become inoperative, contact the bank’s branch manager and make a written application. Ideally bank’s have a standard application format for account reactivation requiring following fields:

• Whether application is made by self/nominee/legal hier/others
• Name of the deposit holder
• Communication address
• Signature
• Address
• Contact number

You will need to request for revalidation. Along with this, you also need to provide the reason for keeping the account inactive. Banks, in return, will provide acknowledgement slip consisting of seal and signature of the bank.

In case, you hold joint account, the signature of the other person would also be required.

But before starting the process of reactivation, contact the customer care of the respective bank and collect all the required details/steps for activating the account. Doing this, will save your time and the inoperative account will become active fast. Only in case of NRI, reactivation request via online facility is taken into consideration.

Documents required to activate the inoperative bank account:

All know your customer (KYC) documents as mentioned below has to be re-submitted:

• Address proof: Driving license, latest utility bills, passport and others
• ID proof
• Passport sized photograph

Documents required might slightly vary for each bank but banks scrutinize all the details to make sure fraudulent activity is not happening. But documents required would mostly be the same as mentioned above. Some banks may also ask to surrender old ATM cards and cheque book.

Once all the processes are done, your account will become active within 6-7 working days.

What to do after your account becomes active?

The very first thing to do is make some kind of transaction. You can either deposit some money into the account or transfer fund to someone.

Is there any charge for account activation?

As per RBI’s guidelines, banks are not allowed to charge money to activate the inoperative account.

If minimum balance is not maintained, what is the penalty fee?

Banks are also not allowed to charge minimum balance penalty.

What if fixed deposit interest is still getting credited. Does the account still become inoperative?

Answer is NO. But the condition is that the interest should get credited on a regular basis.

Does account holder loses the interest accrued on saving account?

Answer is NO. The interest earned on savings account will continue to get credited irrespective of whether the account is active/inoperative.

What if dividend cheque is credited into the account in two years?

In such a case, account will not considered inoperative if dividend gets credited in the savings bank account.

What happens to the dormant account in case of account holder’s death?

Legal heir needs to contact bank for settling the claim. Banks will then follow rules and regulations.

What is account holder goes missing or his whereabouts could not be traced?

Banks will then approach the referring person who introduced the person to open the account or contact the employer or any person whose details are available in the bank’s record.

During inoperative period, can the account holder use ATM/cheque/internet banking facility?

Answer is NO.

How to know whether the account is inoperative?

In order to validate whether the account is really inoperative or not, account holder should visit bank’s website and search whether the account is inoperative. Ideally every bank is expected to maintain record of every bank account which has become inactive. Here’s how to search whether the account is inactive or not on the website of prominent Indian bank’s:

State Bank of India
ICICI Bank
HDFC Bank
Canara Bank

Suggestion: If you do not wish to continue using the account then it is best recommended to close it.