Bank account lying dormant? Here's how to reactivate it

A bank can activate a dormant account the next business day or can take more time depending on internal processes and risk category of the depositor.

If you have not used a bank account for two years, it can turn dormant, denying you services. Banks can mark an account as inoperative after a year if a customer fails to respond to a bank's emails, calls and letters.

The money lying in the account remains safe but to prevent misuse, the regulator has asked banks to be more proactive in finding the whereabouts of the holders of such accounts.

Approaching customers

The Reserve Bank of India (RBI) has directed banks to carry out an annual review of accounts that have seen no operations, no credit or debit transactions other than crediting of periodic interest or debiting of service charges.

An account that has had no transactions for a year is considered inactive and if it stretches to 24 months, banks deem it to be dormant.

The banks have to inform customers "in writing" and try to ascertain the reason if there are no transactions in an account for more than a year.

Banks have to take the details of the new account where the money from the inoperative account can be transferred if a customer has changed the account after moving house.

According to an RBI circular, if the customer replies, the bank should mark the account as operative and give the customer a year's time to start operating it. "However, in case the account holder still does not operate the same during the extended period, banks should classify the same as inoperative account after the expiry of the extended period".

Regularising dormant account

Customers need to send an application to activate the dormant account while visiting the branch. Depending on its internal processes and risk category of the depositor, the bank can activate a dormant account by the next business day or can take more time.

Banks can allow customers to operate dormant accounts on receiving KYC (know your customer) documents or do more due diligence. Besides taking the KYC documents, a bank can ask the customer for verification of the signature.

No charges are levied for activation and banks have to credit interest regular to savings accounts even if they have been lying dormant.