All you need to know about inactive and dormant savings account

It is not uncommon for several individuals to hold several saving accounts under one single name. With the introduction and convenience of online saving account opening, you can now own this account in a few seconds.

However, while is it easy to open several accounts, on the contrary keeping a tab on several bank accounts isn’t. Not only does it increase your confusion, but it will also lead to mismanagement and loss of funds. If you don’t keep track of your saving account, it can cost you funds. Here is all you need to know about inactive or dormant savings account:

When do bank accounts become inactive/dormant?

If you don’t make a transaction through your saving account for more than 12 months, the bank will classify your account as an inactive account. Furthermore, if that particular account does not witness any transaction for another 12 months, it would be further reclassified as a dormant account. The transaction mentioned in this case will consider the transaction made by you through debit cards, net banking or third party transactions. Bank – initiated transactions such as your interest charged and earned on the balance or any penalties or service charged debited are not considered. However, the credit of interest earned from fixed deposits is considered as customer induced transaction and helps keep the account active.

What are the restrictions on active and dormant accounts?

The restrictions on inactive/dormant accounts can vary from bank to bank. Some banks will impose a restriction on net banking facilities, phone banking, and ATM transactions. It can also extend cheque transactions.

Why do banks re – classify accounts to inactive and dormant accounts?

The main reason why a bank will reclassify your savings account is to reduce the risk of fraud in your account. By reclassifying your account, the awareness about your account is raised. A lookout will be kept for potential risks involved, wherein which due diligence will be carried out before any fresh transaction is made through them.

What does the bank do before reclassifying your saving account?

A bank will be required to notify you, at least three months before the reclassification of your account. They will also be required to inform you about the procedure for the re – activation of your account. If you choose to reply to the bank and provide the relevant reasons for the non – operation of your account, your account will still be considered as an operative account for the next year. However, if you don’t make a transaction through your account during this extended period, it will be classified as a dormant/inoperative account until the extended period. You will continue to receive interest on your balance even after your account gets reclassified as a dormant or inactive account.

How to reactive the saving account?

Reactivating your account is very simple, and does not require the same effort as the online saving account opening. You only need to make a deposit or withdrawal transaction to reactive your inactive account. To reactivate your dormant account, you will need to submit a written request at your home branch.


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