A savings as well as current account should be treated as inoperative / dormant if there are no transactions in the account for over a period of two years" as per RBI guidelines.
According to RBI, following type of transactions will be considered for the purpose of classifying an account as 'dormant':
- A debit transaction e.g. Cash withdrawal via ATM
- A credit transaction e.g. Deposit of cash / cheque
- A customer induced transaction e.g. if the interest on Fixed Deposit account is credited to the Savings Bank account as per the mandate of the customer
- A third party transaction e.g. Internet banking transaction
However, the service charges levied by the bank or interest credited by the bank are not considered as transaction for the purpose of classifying an account as 'dormant'.
What the Bank will do in Order to Protect Any Account From being Dormant?
The banks make annual review of all savings bank account and current accounts and in case there is no transaction, the bank is required to inform the account holder to activate the account by making some transaction. If the account is not activated in the second year too then the bank is again required to inform the customer three months in advance of the account being classified as dormant.
It is mandatory for the banks to credit the interest on savings bank accounts on regular basis whether the account is operative or not.
Consequences of Any Account being Dorman
Account holder may face many consequences on his/her account being dormant like cheque book be cannot be issued, address cannot be changed, no cash withdrawal from an ATM, no transaction through internet banking, no renewal of ATM/debit card etc.
Reactivation of Dormant Account
To reactivate the dormant account, the account holder has to submit a request to the bank in person to change the status of the account from 'Dormant to Active' indicating the reasons for not operating the account in the past along with a copy of the pass book or cheque of his/her savings bank account or current account. The account holder has also to submit 2 recent colour passport size photos and KYC documents. Please note that banks do not levy any charge for reactivation of dormant accounts as per RBI guidelines. The reactivation process differs from one bank to another. The account generally gets activated within 24 hours.