Individuals these days manage many accounts, many of them have different savings account serving different purposes. However, in such cases there is a chance that one of such accounts can go unwatched. It is better to make some transactions in all your accounts once in a while so that it wont fall under dormant or inactive status.
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What are dormant, inoperative accounts? When does a savings account become dormant
A savings or current account is categorised as 'inoperative' or 'dormant' if there have been no transactions in the account for more than two years.
However, interest credited by the bank on the account balance, as well as any charges deducted by the bank, are not considered transactions for this reason.
According to the PNB post on social media X ( previously known as Twitter), “ As per the guidelines, a savings account as well as current account is treated as inoperative/dormant if there are no transactions in the account for over a period of two years. If you have not operated your account for over 24 months, please immediately contact your home branch for activation of your account & KYC updation to enjoy hassle free banking service.
Will bank inform the customer about his account becoming dormant?
According to the Tamilnad Mercantile Bank FAQs, “Yes. This happens in two stages: First Stage: The bank is required to review annually all Savings Bank / Current accounts and if there have been no “transactions”, the bank is required to inform the account holder to activate the account by putting through any single debit or credit transaction which can also be put through by a third party. Second Stage: If the account is not activated in the second year also then the bank is required to inform the customer three months prior to the account being classified as dormant.”
What is the procedure for reactivating a dormant account?
In order to change the status of the account from "Dormant to Active," the account holder must personally deliver a letter to the bank together with the passbook for savings banks or the cheque book for current accounts and state the reasons why they haven't used the account in the past. The following records and papers should be provided by the account holder to the bank for verification.
• Recent colour passport size photo – 2 copies
• Copy of valid photo ID document
• Copy of valid address proof documents
Banks are not supposed to charge for reactivation of dormant accounts.
How to keep savings account active?
“The account will be treated as operative because such credit is as per the mandate of the customer. Similarly, any ECS credits e.g. dividends or ECS debits e.g. payment of utility bills keep an account operative. Also, if a customer has two accounts he can mandate a single debit from one account for credit to his other account and keep both accounts operative,” according to the Tamilnad Mercantile Bank website.
FAQs
Any account activity will stop it becoming dormant. It can be as easy as ringing the account provider and asking for a balance, as this is classed as activity. Alternatively you can pay in a small amount, or make a withdrawal.
How to revive a dormant bank account? ›
Activate Dormant Account
- Step1. Visit the branch and submit written application with your signature a sper operating instructions in the account.
- Step2. Submit self-attested proof of identity and address.
- Step3. Initiate any transaction and your account will be activated once again.
A dormant bank account is one that has no activity for over 2 years. Banks do this to mitigate fraud, comply with regulations, and reduce costs. You can reactivate your account by making a transaction or contacting your bank. Banks have regulations in place to activate dormant accounts.
Can you recover a dormant account? ›
Reactivating a dormant account is straightforward. You'll need to provide detailed information to your bank or building society, such as the account number, holder's name, balance, and any statements you have. This will help verify your identity and reclaim your funds.
When a savings account becomes dormant? ›
A savings or current account is categorised as 'inoperative' or 'dormant' if there have been no transactions in the account for more than two years. However, interest credited by the bank on the account balance, as well as any charges deducted by the bank, are not considered transactions for this reason.
What is required to activate a dormant bank account? ›
Reactivating your bank account
- You must submit a written application to the bank. For joint accounts, signatures of all accountholders will be needed, irrespective of a single or joint operating mode.
- You will have to submit your KYC (Know Your Customer) documents. ...
- You have to do at least one financial transaction.
Non-individual customers:
- Request letter on letter head signed as per MOP (Refer Annexure II for format)
- Self-attested copy of entity proof and originals if any(for verification)
- Self-attested copy of identity proof of authorized signatory(ies) and originals (for verification)
State law can dictate when a bank account is considered to be dormant and what happens to the money in it. A typical time frame is three to five years, though again, the rules can depend on where you live.
How to withdraw money from a dormant account? ›
How Can I Claim My Money From a Dormant Account? Your first step is to contact the bank or other financial institution where you had the account. You'll need proper identification and you should have some proof that it's your money, such as a bank statement.
How do banks handle dormant accounts? ›
The financial institution closes the account and sends any leftover funds to the state. This is an automatic legal process called escheatment. But the story is still not officially over. You do have options if your assets have been transferred to the state due to a forgotten or lost bank account.
Will banks levy any charges. If an account is deemed inoperative, the banks are not allowed to impose penalties for failing to maintain the required minimum amounts.
Can I reactivate my dormant account online? ›
An account holder must submit a written application to the bank to reactivate a dormant account. They can check whether their bank's mobile banking application offers the option of re-activating a dormant or inactive bank account.
Will a bank close a dormant account? ›
If you have a current or savings account with us that you haven't used for some time, we might need to close it to help protect you from potential fraud, such as identify theft.
Is dormant account risky? ›
Dormant accounts (usually checking or savings accounts) are those that have had no activity for a lengthy period. These accounts are considered sensitive in nature because they are more likely to be the target of embezzlement due to limited—or lack of—monitoring by the customer or member.
How to write a letter to reactivate a dormant bank account? ›
I, (your name), was an account holder in your branch with account number XXXXXXXXXX. This is to inform you that my bank account is in a dormant/inactive state, currently. I would like to reactivate my bank account in the same branch. Hence, I request you to kindly reactivate my previous bank account.
Can a bank charge for a dormant account? ›
Are there any charges for making a dormant account operative? No charges will be levied for making an inoperative account active. Banks are also not permitted to levy penal charges for non-maintenance of minimum balances in an inoperative account.
How long can a bank account stay dormant? ›
Generally, an account is considered abandoned or unclaimed when there is no customer-initiated activity or contact for a period of three to five years. The specific period is based on the escheatment laws of each state.
How long before a dormant bank account is closed? ›
If you don't use your account for a long period of time the bank or building society may declare it dormant, but the length of time before this happens will vary between institutions. It could be as little as 12 months for a current account, three years for a savings account, or in some cases up to 15 years.
How long is a dormant account valid? ›
Your Savings Account will become dormant if you don't use it for about 12 to 24 months. This does not mean that you will lose your money or that the bank will close your account. The account is still there, but you can't do some things anymore, like using online banking or withdrawing money from ATMs.
What happens if you don't use your bank account for a long time? ›
If you ignore your savings bank account and let it become dormant, you'll face limitations. You won't be able to write checks, renew your ATM/debit card, change your address on file, or perform any transactions through ATM, internet banking , or phone banking.
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