Forgotten bank account? When it turns dormant and how to get your money back

The latest market report highlights that A bank account does not become dormant simply because you have not used your debit card or checked the balance for a few months. Under Reserve Bank of India (RBI) rules, a savings or current account is treated as inoperative when there are no customer-induced transactions for more than two years. Interest credited by the bank and bank-levied service charges are not counted for this purpose.

The money in the account does not disappear when the account becomes inoperative. That stated, transactions may be restricted until the account is activated again. RBI requires banks to provide a process for customers to regain access to such accounts after completing the necessary KYC and customer due diligence requirements.

What happens when an account becomes dormant

The term commonly used by banks is “inoperative account”. RBI says these accounts are segregated from regular accounts partly because they carry a elevated risk of fraud. The classification is based on the absence of customer-induced transactions for more than two years, rather than simply whether the account has been accessed online.

A credit such as interest on a savings account does not by itself keep the account active. RBI has additionally clarified that certain customer-induced credits, such as interest or dividend received through a mandate, can qualify as customer-induced transactions.

So, if you opened an account years ago and stopped using it, do not assume that a small interest credit means the account will stay operative indefinitely. Your money does not vanish

An inoperative status does not mean the balance has been forfeited. The customer can approach the bank to reactivate the account and access the money, subject to the bank completing the required verification.

If the account stays untouched for 10 years, the balance falls into the category of an unclaimed deposit. RBI requires banks to report such accounts and has put in place measures to help customers and legal heirs trace unclaimed deposits.

This is different from the two-year period for becoming inoperative. The 10-year period relates to deposits that stay unclaimed or accounts that have not been operated for that length of time. How to reactivate the account

Contact the bank and ask for activation of the inoperative account. RBI has advised banks to provide KYC updation facilities for activation at all branches, including non-home branches. Where the bank offers the facility, customers can additionally use Video-Customer Identification Process, or V-CIP.

You may need to complete KYC or customer due diligence requirements and provide the documents requested by the bank. The exact process can vary depending on the account and the bank's verification requirements.

RBI says banks should activate an inoperative account within three working days after receiving the required application and completing the necessary KYC checks.

If you have changed cities, switched banks or stopped using an old salary account, check whether the account is still active. Do not make an unnecessary transaction merely to keep it alive without first checking the bank's current requirements.

For an account you no longer need, closing it formally can be cleaner than leaving it unused. For an account containing money, first confirm the balance and update your KYC details before deciding what to do with it.

An old account may be out of sight, but the money in it stays yours. The sooner you identify an unused account and regularise its status, the easier it is to avoid confusion later.