The bank may be trying to alert you that your account is inactive. If the account remains inactive, it may be classified as abandoned, and your funds may be turned over to the state. This practice may also be referred to as escheatment.
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. The specific period is based on the escheatment laws of each state.
If there have been no transactions in a savings or current account for more than two years, the account will be considered inactive or dormant. The accounts that have not been used for more than two years will be noted by banks and kept in different ledgers.
Nonetheless, in cases where an account has remained dormant for more than a decade, the bank might have transferred the remaining balance or unclaimed deposits to the Reserve Bank of India's Depositor Education and Awareness Fund. To claim the funds from this fund, you will need to establish contact with the RBI.
RBI prohibits banks from imposing penalties on dormant accounts. Read on to learn other decisions to boost transparency and ensure the return of unclaimed funds to customers.
An inactive account cannot be used to avail bank services like internet banking, request debit cards/cheque books, etc. Furthermore, you will be unable to alter your contact number, address, or email address if your account becomes dormant.
Claiming unclaimed deposits from banks is easy if you have a valid reason. Just check the bank's website for any inactive or unclaimed accounts linked to you or your family. To claim the funds, you'll need to provide the required documents, which will be verified before settling the claim.
Balances in savings / current accounts which are not operated for 10 years, or term deposits not claimed within 10 years from date of maturity are classified as “Unclaimed Deposits”. These amounts are transferred by banks to “Depositor Education and Awareness” (DEA) Fund maintained by the Reserve Bank of India.
Financial institutions and the individual states determine whether an account is dormant, depending on their own policies. Financial institutions may charge service fees on dormant accounts. Also, they may automatically close a dormant account with zero balance.
INACTIVE AND DORMANT ACCOUNT
If you have a current or a savings bank account and have not done any transactions through it for more than 12 months, then it will be classified as an inactive account. And if you don't do any transactions from a bank account for 24 months, then it will be classified as dormant.
If you have a current or savings account with us that you haven't used for some time, we might need to close it to help protect you from potential fraud, such as identify theft. We'll always try to contact you before we do this.
Accounts, where there is no 'customer induced' transaction for a period of 6 months will be converted to dormant account status in the interest of the depositor as well as the Bank. The depositor will be informed of charges, if any, which the Bank will levy on dormant accounts.
Funds will get credited to the an inactive or dormant account until and unless it is in Total Freeze. If it is a customer induced transaction the inactive account will become active however to activate a dormant account the account holder needs to visit the branch with original ID proofs to get it activated.
Risks And Consequences Of Dormant Accounts
These fees can slowly erode the account balance, diminishing your hard-earned savings. Moreover, if an account remains dormant for a specified period, the funds may be transferred to government-held unclaimed property programs in some jurisdictions.
Dormant accounts may have certain privileges assigned to them, allowing extensive access to critical systems or sensitive information. If these accounts are compromised, attackers can abuse these privileges to perform unauthorised actions, manipulate data, or even cause system-wide disruptions.
Inactive accounts that haven't been accessed for extended periods are more likely to be compromised due to password reuse and lack of multifactor authentication.
According to the Fair Credit Reporting Act (FCRA), negative items can appear on your credit report for up to 7 years (and possibly more). These include items such as debt collections and late payments. The time frame begins from the original date of the delinquency (the date of the missed payment).
The statute of limitations is a law that limits how long debt collectors can legally sue consumers for unpaid debt. The statute of limitations on debt varies by state and type of debt, ranging from three years to as long as 20 years.
Banks can freeze an account for a variety of reasons, including suspicious or illegal activity, or unpaid debts due to creditors or governments. Banks may freeze accounts for using the account in a manner that goes against its policies.
Most of the time, a statute of limitations does not apply to dormant accounts. This means that the owner or beneficiary can claim the money at any time.
What happens when your Google Account is inactive. When your Google Account has not been used within a 2-year period, your Google Account, that is then deemed inactive, and all of its content and data may be deleted.
Reported information usually is removed from your ChexSystems file after five years. Until then, you might be able to open a second-chance checking account. These accounts are designed for people who have a record with consumer reporting agencies such as ChexSystems.
A savings/ current account will be treated as inoperative if there are no customer induced transactions in the account for a period of over two years, reads the RBI notification. The Reserve Bank of India (RBI) has released a circular that issued fresh instructions relating to inoperative accounts.
After a specified amount of time that varies by state, banks must escheat the funds of inactive accounts, meaning they're required to turn the funds over to the state. Dormancy fees are designed to limit this from happening by incentivizing customers to keep their accounts active.
In order to change the status of the account from "Dormant to Active," the account holder must personally deliver a letter to the bank together with the passbook for savings banks or the cheque book for current accounts and state the reasons why they haven't used the account in the past.