[www.keralites.net] Smart things to know about inoperative/dormant accounts

 

1) A bank account may be classified as inoperative or dormant if it has had no debit or credit transactions for more than two years.

2) While classifying accounts as inoperative, bank-induced transactions like interest credit on the balance in the account or debit of service charges will not be considered.

3) Once an account is classified as inoperative, services such as ATM facility can be suspended and account operations can be conducted only from the home branch.

4) Usually, there is no charge if an account is declared dormant. However, if the amount falls below the minimum balance requirement, the bank may levy a charge.

5) Banks are required to send a written communication to the account holder before classifying an account as inoperative or dormant.

6) If a fixed deposits account matures and the proceeds are unclaimed, the savings interest rate must be paid on the account.

How to reactivate your dormant bank account

If there have been no transactions in your savings bank account for two years, except for interest payments credited by your bank, the bank will classify your account as inoperative or dormant. You will not be able to use your ATM card, issue cheques or transact in the account without reactivating it. The bank makes your account inactive to safeguard your money from any risk of fraudulent transactions. You can reactivate your account anytime to be able to operate it or close it.

RBI has mandated banks to cut down any hassle for customers to reactivate their dormant accounts.  

Banks are expected to exercise due diligence in verifying customer credentials before reactivating accounts. Usually banks will require the account holders to present themselves with address proof and identiity documents, at the nearest branch, to complete the formalities. Banks are cautious about sudden requests for withdrawal from a dormant account.

RBI only instructs banks to exercise due diligence with inactive accounts. The actual process of reactivation may vary from bank to bank.

Written Application

The bank will request a written application signed by all joint holders of the account, irrespective of operating mode, to reactivate an account.

KYC Compliance

All joint holders must comply with the Know Your Customer (KYC) norms currently in force, if they have not been complied to, for an inactive account opened earlier. This includes PAN, address proof and proof of residence
documentation.

Cards, Passbook and Cheque Book

Account holders may be asked to show or surrender ATM cards, cheque books for issuance of new cards and cheque books. This may not be mandatory.

POINTS TO NOTE

Be prepared for due diligence from bank

Activation needs just one transaction

To avoid reactivation procedure of an account you would like to retain, make at least one transaction, online or offline, in a year.

Charges

There is no charge to reactivate a dormant bank account . If your bank imposes a charge, report to the banking ombudsman.

 Best Regards

Prakash Nair

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