Page 56 - Banking Finance February 2024

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How to make a dormant bank

account regular

T he Reserve Bank of India (RBI) has come out with registered email stating that on the basis of the know your
customer (KYC) documents submitted by them, the
an undated set of rules for inoperative, or
inoperative status of the account has been removed.
dormant, accounts. Here's an explainer of the
concept and how to avoid getting penalised.
What are the charges for making a dormant
When does a bank account become inoperative account operative?
or dormant? No charges will be levied for activation of inoperative
A savings and current account is treated as inoperative or accounts. Banks are also not permitted to levy penal charges
dormant if there are no customer induced financial or non- for non-maintenance of minimum balances in any account
financial transactions in the account for over a period of two that is classified as an inoperative account.
years. Changing transaction limits, and requesting cheque To be sure, banks are liable to credit interest on savings
book or credit/debit card issuance or a balance enquiry are accounts on a regular basis irrespective of the fact that the
non-financial transactions. account is in operation or not.
When does a bank tell customers about the What happens if an account remains dormant
status or the account? for long?
If there is no transaction in an account for a year, banks will The credit balance in any deposit account maintained with
inform the account holder through letters or email or SMS banks, which have not been operated upon for ten years or
about it. The alert message would invariably mention that more, or any amount remaining unclaimed for ten years or
the account would turn 'inoperative' if no operations are more is called unclaimed deposits. After 10 years, banks
done during the next one year. If the account holder still transfer the money to the Depositor Education & Awareness
fails to comply within the extended period, banks would (DEA) Fund maintained by the RBI.
classify the said account as inoperative.
Will the money in the deposit account be
What happens if a bank account turns forfeited?
inoperative? No. Separate forms are available at bank branches for
When a bank account turns inoperative, the account holder recovering unclaimed deposits. There are prescribed
cannot make any financial or non-financial transaction in the procedures for such a claim by a depositor or his/her
account. The balance amount in the said account will nominee/legal heir in case of death of the said depositor.
however remain safe and keep earning interest on regular Banks maintain a list of inoperative accounts and unclaimed
intervals. deposits.
How to regularise a dormant account? What should account holders do to keep it
The Reserve Bank of India has made the process of operative?
regularising a dormant account simple. An account can be To keep the account active and avoid hassles, account
made operative merely submitting a fresh set of documents holders must carry out some transaction - financial or non-
for customer identification. In case of joint holding, financial - in the account on regular intervals, at least once
documents including photograph, PAN, proof of address and in a year. A savings account is treated as operative, if interest
proof of identity need to be submitted for both the account on fixed deposits is credited to this account, which otherwise
holders. The bank will intimate customers through SMS and not used for transactions. (Refer to Ths Economic Times)

50 | 2024 | FEBRUARY | BANKING FINANCE