What is an Inoperative (Dormant) Account?

Bank accounts become inoperative if they remain unused for a set time frame. Here is how you can reactivate it.
 

We must adhere to many rules when it comes to our bank accounts. One of the essential guidelines is regularly using our account, keeping it active. If we fail to do so, the account will be considered dormant.

An inoperative account is an account that has been inactive for an extended length of time. Read on to get a deeper understanding of it.

As per RBI guidelines, a savings/current account will be treated as inoperative if there are no transactions in the account for over a period of two years. To reduce fraud, banks convert accounts that have been idle for a prolonged period of time into inoperative accounts. You cannot make payments, transfer money, make withdrawals, and even log into your account when it has been declared inoperative.

Difference between a dormant and inactive account
 

An inactive savings account typically refers to an account where there has been no financial activity for a period of 1-2 years, often determined by the bank's policies. During this time, the account remains open and accessible, but no transactions occur. Inactive accounts might still accrue interest, depending on the bank's terms.

On the other hand, a dormant savings account is one that has been inactive for an extended period, usually exceeding 3 years or more. In this case, the bank may classify the account as dormant, resulting in restrictions such as limited access or the cessation of interest accrual. Reactivating a dormant account typically requires specific actions such as visiting the bank or initiating a transaction.

What is an inactive savings account?
 

Bank defines specific criteria such as a certain duration without transactions like 1-2 years to classify an account as an inactive savings account. During this period, the account remains open and accessible to the account holder, but no deposits, withdrawals, or other transactions occur.

Inactivity may result from various reasons including the account holder's oversight, changing financial priorities, or simply not needing to use the account for a period of time. Despite not being used, an inactive account may still accrue interest, depending on the bank's policies. It's essential for account holders to monitor their accounts regularly and understand their bank's terms to prevent them from being classified as inactive and to maintain their financial health.

How to reactivate an inactive savings account?
 

To reactivate an inactive savings account, contact your bank to inquire about their procedure. Provide the necessary identification documents and complete any required forms. Typically, you'll need to make a transaction such as a deposit or withdrawal to reactivate the account. Ensure that you meet any minimum deposit requirements. Once completed, confirm with the bank that your account is reactivated. Stay informed about future activity requirements to prevent it from becoming inactive again.

What happens if your savings bank account becomes inoperative?
 

Different financial institutions have different rules for an inoperative account. If an inoperative account has no balance, some institutions close it after a certain period. However, if you are associated with IDFC FIRST Bank, you will be informed before your account is closed.

Mentioned below are some of the services/transactions that are not permitted if your account is inoperative:

• Change of residence
• Renewal of an ATM or debit card
• Addition or removal of a joint account holder
• Change of signature
• Transactions through internet banking or at a bank branch

How to reactivate an inoperative account?
 

Banks cannot levy additional fees while reactivating an inoperative bank account according to RBI norms. To reactivate an inoperative account, you must submit a completed application form to the bank detailing the reasons for the account's inactivity. We request you to visit the nearest IDFC FIRST Bank branch or contact your relationship manager. You will require all KYC documents as well as ID and address proof of all signatories to revive your account.

Once the above process is done and upon the bank official’s confirmation, you should make at least one financial transaction in your account. Some of the relevant financial transactions are listed below:

• Deposit money using a cheque
• Deposits of cash into your account
• An ATM can be used to make a withdrawal or a deposit.
• Make an online transaction in your dormant account.

Regular transactions are essential to keep your account active. Ensure that you use all your bank accounts regularly. You can also prevent your account from becoming dormant by taking several actions such as conducting a transaction or withdrawing cash. With its customer-first values, IDFC FIRST Bank clearly mentions all the terms for keeping your account active in the welcome kit. You also enjoy zero charges on all commonly used Savings Account services, helping you save more. Opening a bank account online with IDFC FIRST Bank will also help in getting one of the highest bank account interest rates with a monthly interest credit facility for better returns over time.