How to activate Dormant Bank Account

Do you have more than two bank accounts but do not use them often? If yes, then you must ensure that you either reactivate or close the account. As per the Reserve Bank of India guidelines, any savings account or current account which has seen no transactions for two years, will be deemed inoperative or dormant. Here are a few tips on how to reactivate your account.

Why does your bank account become inoperative or dormant?

• If there has been no transaction in the account over a one year or more, then it becomes inactive.
• However, if there has been no transaction for two whole years, then the account automatically becomes dormant.
• Only a savings account or current account can become dormant.

How do you know if your account is dormant?

• When you cannot make any transaction through any banking channel, be it ATM/phone/online.
• An inoperative account may not affect your credit history, but to avoid fraud, it is better to reactivate it.
• According to a World Bank report, India accounts for 195 million of the 460 million adults with dormant accounts around the world. At 43 per cent, the rate of dormancy is quite high measures to keep your account active.
• Divide your transactions between different accounts to keep all your accounts active. For example, pay loan EMIs from one account, utility bills from another, SIPs from a third, for example.
• If nothing, make one withdrawal transaction from your accounts once a year.

Measures to keep your account active

• Divide your transactions between different accounts to keep all your accounts active. For example, pay loan EMIs from one account, utility bills from another, SIPs from a third, for example.
• If nothing, make one withdrawal transaction from your accounts once a year.

How to reactivate your account

• The process is the same as opening a new account.
• Submit an application to the branch manager, stating why you could not transact for two years.
• Carry KYC documents, many banks require you to be physically present to verify signature.
• Many banks have online facility for reactivation for NRI clients.

RBI rules

• No activation charges for inactive or dormant account.
• Banks can't charge minimum balance penalty either on dormant or inoperative account.

Points to note

• No bank can classify an account dormant before 24 months of inactivity.
• The account will be treated as operative as long as dividend or FD income is credited into it.
• Account will be treated as inoperative only after two years from the date of the last credit entry of dividend or FD, provided there is no other customer-induced transaction.
• Dormant account reactivation procedures differ for each bank.
• To reduce risk of fraud, check your savings accounts from time to time.
• While filing returns, submit details of all your accounts, including dormant and inactive ones.