People often open multiple bank accounts but eventually stop using some of them. When there are no transactions in these accounts for a long time, the question arises: will the bank seize their money?
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Inactive Bank Account: People often open multiple bank accounts but stop using some of them over time. When there are no transactions in such accounts for a long time, people wonder if the bank will confiscate their money. In fact, the Reserve Bank of India (RBI) regulations are quite clear regarding this situation. Let’s explore what happens if your bank account remains inactive for two years, whether your money is safe, and the process for reactivating such an account.
According to RBI regulations, if a customer does not make any transactions in a savings or current account for 24 consecutive months, the account is declared “dormant.” It’s important to note that interest or charges levied by the bank are not considered customer transactions. A transaction is a cash deposit, withdrawal, or transfer by the customer.
Difference between an inactive and a dormant account
An account is considered “inactive” if there are no transactions for 12 months, while it becomes “dormant” after 24 months. In an inactive account, some basic services such as balance checks and statement withdrawals are still possible, but in a dormant account, debit card, UPI, net banking, and ATM services are disabled.
Does the bank seize the money?
The most important question is where will your money go? According to RBI regulations, banks cannot seize the money in your inactive or dormant account under any circumstances. Your balance remains completely safe and continues to earn interest. The only difference is that you cannot use the account until it is reactivated.
What happens after 10 years?
If the account remains dormant for 10 consecutive years and no claim is made, the bank transfers the account balance and interest to the Depositor Education and Awareness Fund (DEAF). However, the good news is that the account holder or their nominee can claim this money at any time.
How to reactivate your account?
To reactivate your account, a customer must visit a bank branch and submit a written application and KYC documents. Sometimes, the bank may ask for a small transaction. Importantly, there are no penalties or charges for this.
How to avoid becoming dormant?
If you don’t want your account to become dormant, make small transactions from time to time, even if it’s just a ₹10 UPI transfer. This will keep your account active.
