Dormant Account: Meaning and Activation Process Explained

According to a recent report by the Reserve Bank of India (RBI), there are over 10 crore dormant accounts in the country, holding nearly ₹35,000 crore in unclaimed deposits. Dormant accounts, often overlooked by account holders, can become a significant concern, not just for individuals but also for financial institutions.

A dormant account is one where there hasn’t been any activity for an extended period, typically 24 months and beyond. While it might seem like a minor inconvenience, a dormant account can lead to restricted access to funds, missed opportunities for financial growth, and even risks of fraud.

In this blog, we’ll delve into everything you need to know about dormant accounts, including how they’re classified, steps to reactivate them, and tips to avoid your account becoming dormant in the future. Let’s ensure your hard-earned money never sleeps!

What is a Dormant Account?

As per RBI’s (Reserve Bank of India’s) classification, a Savings or Current Account can be deemed dormant if there are no customer-induced transactions for a period of 24 months (or for such other period as may be decided by the Bank subject to the directives of RBI). In such cases, the bank, at its sole discretion, deny any or all services and/or transactions.

What Falls Under Customer-Initiated Transactions?

The following activities are classified as customer-induced or initiated transactions:

• Transactions through cheque
• Cash or cheque deposit
• Withdrawal or deposit through ATM
• Transaction through Net Banking
• Transaction by standing instruction, ECS, and EFT
• Credit of interest from fixed deposit to Savings Deposit
• Execution of standing instructions (debits or credits) in Savings Deposit

How to Make a Dormant Account Active

To reactivate a dormant account, you can take the following steps:

Step 1: Visit the Bank Branch

Visit the branch of the bank where the account is maintained. You can locate bank branches here.

Step 2: Submit a Written Request

Provide a written request to the bank for reactivating the dormant account. You need to fill out this form.

Step 3: Complete KYC Requirements

You would need to complete any required Know Your Customer (KYC) formalities, which could include submitting updated identification and address proof documents.

Step 4: Perform a Transaction: 

Conduct a transaction in the account, such as a deposit or withdrawal, to demonstrate activity.

By following these steps, the customer can request the bank to reactivate the dormant account and resume normal operations.

Is a Dormant Account Same as Inactive Account?

No, a dormant account is not the same as an inactive account. A bank account is classified as “inactive” if no transactions are carried out for 12 months or 1 years. However, unlike a dormant account, an inactive account can be reversed to an active bank account just by performing a transaction. Please refer to the table below to understand the differences: