Generally, an abandoned account is one for which there has been no customer-initiated activity or contact for a period of three to five years. States' abandoned-property programs require banks to turn over the funds of such bank accounts to the custody of the state treasurer.
A dormant account is not just one that hasn't been used for a while, it's one that has been left without any customer-initiated activity for an extended period. This period can vary significantly depending on the provider, from 12 months for current accounts to up to 15 years for savings accounts.
The timeframe varies depending on the bank's policies, but typically an account becomes inactive after 12 to 24 months of no customer-initiated transactions. Dormancy usually sets in after a longer period, often exceeding two to five years.
When an account has no transactions for 12 months, it is considered inactive. If there is no activity for 24 months, it is deemed dormant.
Myth About Automatic Closure:
Contrary to the layman's opinion, the zero balance itself does not automatically close the very day of the zero balance. The dynamic nature of business always makes banks look at this as a cyclical fluctuation; they may normally see periodic declines to zero on any given date.
A savings/current account is considered inactive if no transactions are made through it for more than 12 months. What is a dormant account? When you do not make any transactions in your bank account for 24 months, the bank classifies it as a dormant account. How can I activate an inactive savings account?
Inactive accounts with no transaction history can raise concerns and incur unnecessary maintenance costs. To mitigate risks, banks may freeze and eventually close such accounts after a period of dormancy.
As per RBI guidelines, a savings/current account will be inoperative if there are no transactions in the account for over a period of two years. You cannot make payments, transfer money, make withdrawals, orlog into your account when it is inoperative.
Your Account Is Inactive
Your bank could decide to close your account if you haven't been using it enough (or at all).
Once your account has been dormant for 2 years, we will automatically close your account. If you had a positive balance in your account, these funds will be moved to unclaimed balances, and you can claim these at any time.
Often, if a financial institution receives a request for transfer and doesn't have an account with a matching account number, or the account has been closed, the transfer will be declined. No money will be exchanged. The funds will remain with the sender.
Inactive Accounts
Generally, an account is considered abandoned or unclaimed when there is no customer-initiated activity or contact for a period of three to five years.
Whether you open the Account at a branch or online, if it remains at a zero balance (R0. 00) for a consecutive period of 360 days, it will be automatically closed, with or without notice to you. 3.2 If you choose to take a debit card with the Account, the card will be linked to your Account.
If a bank receives a transfer or direct deposit to a closed account, it may reject the transaction outright. Depending on how quickly this happens, the money may never leave the sender's account, or it may get returned several days later.
Even if you maintain a balance but rarely engage in any activity such as online transfers or deposits for an extended time your bank may consider your account dormant and close your account.
If an account reaches the state-defined period of inactivity, it's classified as Unclaimed Property, the holder must proceed with reporting this account to the state in a process often referred to as “escheatment.” Escheatment involves transferring unclaimed funds to the state.
Banks are obligated to transfer the credit balance in any deposit account that has been inactive for ten years or longer to the DEA Fund, which is maintained by the RBI. Penal charges cannot be imposed by banks for non-maintenance of minimum balances in any account classified as an inoperative account.
If you don't make any transactions with an account for a long time, usually a year, your bank could change its status to dormant. This means you won't be able to use it to pay for goods and services or deposit or withdraw money into or from that account.
If a bank account is merely closed, you should contact the bank to recover the money. That being said a “dormant” bank account is one that has been turned over to the state. In that case, you need to contact the office of abandoned property for your state and reclaim it.
Banks have the authority to freeze an account if they believe that a transaction in it is questionable. Before freezing, they must, however, notify the holder. An unauthorised business transaction that is forbidden by RBI regulations may be involved in an unusual transaction using a savings account.
If no transactions are made to or from an account over a 12-month period, an account is classed as inactive. After this time, we freeze the account to prevent any risks from fraud, or if the balance is nil, we automatically close it.
Ans: No, you can't move money from your bank account to your dormant account. If you have a dormant bank account and need to transfer funds to it, you should call your bank and become familiar with the transfer method.
Your account has repeated overdrafts or a negative balance.
If your account has incurred excessive overdraft fees resulting in a negative balance, or if you have an unpaid balance, a bank may decide to close your account.
If you have not used a savings account to transact for over 12 months, your account becomes inactive. If your account has been inactive for 24 months, it becomes dormant. Activity threshold typically involves no deposits, withdrawals, or transactions made within the bank's specified timeframe.