How To Activate Dormant Account in Bank – Application Format, Documents & Charges

If a bank account has been idle for a long time, the owner will be unable to use the bank’s services. Read the article below to know how to Activate Dormant Account in Bank.

How To Activate Dormant Account in Bank

Activate Dormant Account Highlights

  • If a bank account is not utilised for two years, it is considered dormant.
  • An idle SBI account can become vulnerable to fraud.
  • SBI does not charge a fee to reactivate an account that is currently inactive.

Why a Bank Account Becomes Dormant?

There are a variety of reasons why an account holder may be unable to run his or her account consistently for an extended period of time. If you don’t use your bank account for two years, it will become dormant or inactive. If a bank account has been idle for a long time, the owner will be unable to use the bank’s services. In Case, If frequent transactions are not made, the bank account can become vulnerable to fraud, according to the State Bank of India (SBI).

What Happens If Your Bank Account Is Inactive?

If a bank account becomes dormant, an individual may encounter a slew of issues, ranging from not receiving SMS alerts on your registered telephone number to being unable to withdraw money in an emergency. You can’t even use the internet to access your bank account and make transactions.

It’s worth noting that if a bank account isn’t used for a year and there hasn’t been a genuine transaction, the bank will notify the account’s owner. If the bank does not receive a response, the operator’s bank account is categorized as “inactive.” When an ‘inactive’ bank account remains inactive for two years and is confirmed by the account manager, it becomes ‘inoperative’ or ‘dormant.’

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Limitations of Dormant Bank Accounts

The Reserve Bank of India has not specified the restrictions that will be imposed on dormant or inactive accounts. It just advises banks to conduct due diligence before clearing transactions in these accounts. As a result, the restrictions will range from one bank to the next.

ATM, internet banking, and phone banking transactions will all be restricted by most banks. Some will also use these limits to check transactions. Others refuse to let you change your address, issue or renew a debit card, or request a checkbook, among other things.

In most circumstances, inactive accounts will be subject to the following restrictions:

  • There will be no new chequebook issued.
  • There will be no new debit cards issued.
  • Internet banking is not available to you.
  • You should expect the following extra restrictions once it goes dormant:
  • There will be no cash withdrawals from ATMs or bank branches, nor will there be any phone banking.
  • There will be no renewal of debit cards.
  • Signatures will not be changed.
  • unable to update address, email address, or phone number.
  • A joint holder cannot be added or removed.

Being unable to get what is effectively your money on time can be aggravating, so it’s best to avoid your account being dormant or inactive in the first place.

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How to Re-Activate Dormant Account in Bank

If in case your bank account has been designated as dormant, you can reactivate it by following SBI’s recommended steps. To activate your dormant SBI account, follow these steps:

  • Find and confirm the status of your account: You’ll need to double-check whether your bank has turned your account dormant.You can check whether your account is active or not by going directly to the SBI website. SBI maintains a list of all bank accounts that are no longer active, with information about those accounts available on the web.
  • Application to be written to the bank: If you discover that your bank account has been dormant, write to your SBI bank manager and request that the account be revalidated. If the time period has beyond two years, you must also explain why your bank account was dormant. If you have a joint account, the application must be signed by all joint owners.
  • Submit documents:New KYC documents must be submitted to the account manager, including the account holder’s passport size pictures, PAN card, and identification and residence proof. All of these documents must be given to your SBI branch manager, together with the application form.
  • Transactions are required to activate your account if it has been idle for a long period and has not been found inoperative. Once your account has been activated, you will be able to use online banking, receive fund transfers, and make a direct transfer from a third party. Your SBI account will also allow you to pay your phone and other service bills online.
  • SBI does not charge a fee to make an inactive account operational in accordance with Reserve Bank of India (RBI) regulation. Your account will be operational after the bank confirms it. After due diligence, which involves verification of the transaction’s transparency, signature, identity identification, and other critical facts, SBI services in an inactive account can be granted.

How Do You Keep Your Account from Going Inactive?

Making a minor transaction on a regular basis is the simplest strategy to ensure that the account does not become inactive. This could be a little deposit or withdrawal, and it’s simple to conduct using net banking.

Even if you haven’t transacted in a long time, you should receive a warning from your bank three months before your account becomes dormant.

You have the option of responding to this communication and explaining why you are not using your account. If the bank finds your reasons to be valid, you will be given a 12-month extension and your account will be classified as active for the duration of the extension.

However, you should make a minor deposit or withdrawal as soon as (or before) you receive this alert. Your account will be protected from being listed as dormant for another 24 months if you do so.

One fast mental advice to keep your accounts from being dormant is to set up separate bank accounts for different purposes. Use one account to pay bills, another to invest, a third to pay credit card bills, and so on.

In this manner, all of your accounts will have consistent activity and will never become dormant.

Furthermore, having too many bank accounts is a common reason of accounts being dormant. If you find yourself in this situation, it’s a good idea to close any accounts you don’t use.

It’s very easy to start a new savings account these days, and it doesn’t make sense to keep an account open that you know you won’t use for a long time.

So, identify the accounts you don’t need and submit a request to shut them with the appropriate bank.

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FAQ’s

Is it necessary for me to report inactive accounts as part of my tax return?

Yes, even if the bank accounts are now dormant or inactive, you must still report them.
If your bank account has been inactive for longer than three years, you are exempt from this restriction. You don’t have to declare it in that situation.

How can you tell whether an account is inactive?

Banks will authorize an inactive account search if a bank account has been inactive for more than ten years. This search is available on the websites of SBI, ICICI, and HDFC.

What is the cost of reactivating a dormant account?

Because the RBI has outlawed it, there are no fees for reactivating your dormant bank account. Furthermore, banks are prohibited from imposing minimum balance penalties on these accounts. Before your account is categorized as dormant, you will be notified three months in advance.

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