Dormant Savings Accounts 101

By BankBazaar | June 19, 2017

Dormant Savings Accounts 101

Most of us have a couple of Savings Accounts, and it’s quite possible that we don’t use all of them. Have you ever wondered what happens to all those unused bank accounts? Well, apart from getting frequent messages relating to balance maintenance charges, most people don’t really know what happens to these accounts.

Let’s start from the top. What exactly is a dormant Savings Account? As the name suggests, any unused bank account is deemed to be ‘dormant’. RBI guidelines suggest that any bank account that doesn’t see any transactions whatsoever for 24 months is referred to as a dormant account. These transactions include all types of credit and debit activities.

Additional Reading: Top 5 Savings Accounts For 2016

People often tend to get confused between dormant and inactive accounts. Accounts that don’t see transactions in any form for a period of 12 months are classified as inactive, while dormant accounts are ones that remain inactive for at least 24 months.

Usually, when people switch jobs, they tend to forget about the existence of their salary accounts from their previous companies. This is one of the reasons why many people have a bunch of dormant accounts to their name.

But, what kind of transactions do you need to carry out to keep these accounts active? Here are a few such transactions that can save your accounts from turning dormant:

  • Transactions through cheques
  • Cash deposits
  • Outward/inward bills
  • Cash deposits or withdrawals through ATMs
  • Net banking transactions
  • Online banking transactions

If you use your account to make at least one of the above-mentioned transactions on a regular basis, it will continue to remain active. Yes! It’s as simple as that.

But, what exactly is the point of going through all that trouble if the account is of no use to you? Well, if your account turns dormant, certain services could be discontinued. For starters, you can’t file any of the following requests if your one and only account turns dormant:

  • An address change: Did you move recently? Well, that might be good for you. But, in case you have a dormant bank account, you, unfortunately, cannot get your address changed in your banking records. Too bad!
  • A change in signature: If you have decided to change your signature, a change in signature request won’t be accepted if you have a dormant account.
  • Adding or deleting a joint account holder: Doing either of these isn’t particularly easy with a dormant Savings Account.
  • ATM card renewal: Did your Debit Card expire recently? Planning to renew it? Well, you can forget about it if your account is dormant.
  • ATM cash withdrawal: No matter how desperately you want to withdraw money, you won’t be able to. That’s what dormant bank accounts do to you.
  • Net banking/ branch banking: Did you think that only your ATM cash withdrawals were prohibited? Nah! The same thing applies to your internet and branch banking as well.

Additional Reading: 7 Reasons Why Fixed Deposits Are Better Than Savings Accounts

If you thought that was it, we have more information on dormant accounts for you.

How will you know if your account is about to turn dormant?

Generally, banks do inform customers at least two to three months in advance before deeming an account to be dormant. That should give you enough time to take preventive measures if you find yourself in such a situation.

How can you take these preventive measures anyway?

The first and the most obvious measure you can take is to start using your bank account frequently enough to stop it from becoming dormant. Use it to carry out some transactions, regardless of how small they may be. One transaction, at least once a year, shouldn’t be too difficult to carry out.

Want to reactivate your dormant account? You can do that too!

The good news about your account turning dormant is that you can reactivate it at any time you want. Now, the only thing to keep in mind is that the reactivation process might be slightly different for each bank. Once you take all the necessary steps to reactivate the account, you don’t have to wait too long, since it is usually activated within 24 hours.

All you need to do is make at least one transaction by cheque or ATM. If you have any other active accounts, you can simply send a message from your personal internet banking ID. In this message, you need to send an instruction to debit at least one rupee from the active account and credit it to the dormant one.

With regards to the paperwork involved, you will need to submit a duly filled application form, giving the bank a valid reason for your account going dormant. Before reactivating your account, the bank will conduct some strict checks. So, better be prepared!

You can’t send someone to represent you. Your physical presence is required and you also need to submit documents like your address and identity proof. Once all your Know Your Customer (KYC) formalities are done, you can sit back and relax. Also, you don’t need to pay for activating your dormant accounts (according to RBI guidelines).

Additional Reading: Aadhaar Based e-KYC: All You Need To Know

That’s pretty much all you need to know about dormant accounts. We hope we answered all your questions. In case you have some more, please feel free to ask us in the comments section below.

Still don’t have a Savings Account? What are you waiting for?

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Category: Savings Accounts
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