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And How to ensure that your bank account remains active always.
When it comes to our bank accounts, there are specific rules and regulations that we all must follow. One of the primary rules is that we should initiate some or the other activity on our accounts every few months. A bank account that has no activity for an extended period becomes a dormant account. If our bank cannot establish a connection with account holders, their accounts will eventually be inactive in 1 year and dormant in 2 years. Let us understand what a dormant account is.
A dormant account is a bank account that you haven’t used for 24 months. If you don’t deposit, withdraw, or even log in into your mobile banking or Internet banking, the bank marks the account as dormant. This is done to help prevent fraud or misuse. The account still holds your money, but you can’t use it like before. To avoid dormancy, make sure you do at least one small transaction every few months.
A dormant bank account keeps your money safe but limits what you can do. You won’t be able to send money, withdraw cash, or use internet banking. However, you will not stop earning savings account interest . To start using the account, you’ll need to visit the bank, and complete KYC process, to reactivate it.
Dormant bank accounts can be reactivated easily.
For reactivation of a dormant account, you will need to submit a duly filled application to the bank justifying reasons for absence in transactions. You will need to be physically present at the branch, and all account holders need to submit their valid KYC documents. As per RBI guidelines, there will not be any charges for activating a dormant bank account.
Follow these steps to get your money back. These also apply if you’re checking how to withdraw money from dormant account:
When money from a dormant bank account remains unclaimed for 10 years from the last customer induced transaction date, banks need to transfer the same to the RBI’s unclaimed deposit DEAF account. Bank has its defined process, for customers to claim these funds from RBI’s DEAF account.
Once verified, the RBI releases the funds.
If you have decided that you no longer need an unused account, here’s how to close it and get your money back:
Aadhar Card + PAN Card + Video KYC = Account opened!
When money from a dormant bank account remains unclaimed for several years, it may be transferred to the state’s unclaimed property department. Each state has its own process, usually starting with an online search tool where you enter your name and other details. If a match is found, you’ll be asked to provide documents to prove ownership.
Once verified, the state releases the funds. Some states allow you to compute savings interest separately before submitting a claim, especially if the account held funds for several years.
If you're done with an account that hasn’t been used in a while, here’s how to close it and get your money back:
As an account holder, you must be aware of the meaning of dormant account. This will help you ensure to do sufficient transactions to keep your bank account active. You can take several preventive measures to avoid your account been labelled as dormant. Simply carry out a financial or non - financial transaction like transfer funds through any of the banking channels, withdraw cash, , change your address, etc. to ensure that your account always remains active.
With DBS Bank app, you can open a new saving account in a few minutes! Download the app to get started.
*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.
