Dormant Account: Meaning, reasons & how to reactivate

What is an inactive or inoperative account?
 

Bank accounts can become inoperative if left unused for a specified period, making it crucial to keep your account active with regular transactions. If your account remains inactive for an extended time, it may be classified as a dormant account, restricting payments, withdrawals, or transfers.

According to the RBI guidelines, a savings or current account with no customer-initiated transactions for over 12 months is considered inactive. This step is taken to prevent fraud and protect account holders.

Inactivity may result from various reasons including the account holder's oversight, changing financial priorities, or lack of need to use the account. Despite not being used, an inactive account may still accrue interest, depending on the bank's policies. It's essential for account holders to monitor their accounts regularly and understand their bank's terms to prevent accounts from being classified as inactive and maintain their financial health.

If your account has been declared inoperative, don’t worry—you can reactivate it easily. Read on to learn how to activate a dormant account and regain full access to banking services.

Difference between a dormant and inactive account
 

An inactive savings account typically refers to an account in which no financial activity has been carried out for a period of 12 months, often determined by the bank's policies. During this time, the account remains open and accessible, but no transactions can be done. Inactive accounts might still accrue interest, depending on the bank's terms.

A dormant/inoperative savings account is one that has been inactive for an extended period, usually exceeding 24 months. In this case, the bank may classify the account as dormant, resulting in restrictions such as limited access or the termination of interest accrual. Reactivating a dormant account typically requires specific actions such as visiting the bank or initiating a transaction.

How to reactivate an inactive savings account?
 

To reactivate an inactive savings account, contact your bank to inquire about their processes. Provide the necessary identification documents and submit the required forms. Typically, you'll need to make a transaction such as a deposit or withdrawal to reactivate the account. Ensure that you meet the minimum deposit requirements. Once completed, confirm with the bank that your account is reactivated and stay informed about future inactivity guidelines.

What happens if your savings account becomes inoperative/dormant? 
 

Different financial institutions have different rules for an inoperative account. If an inoperative account has no balance, some institutions close it after a certain period. However, with IDFC FIRST Bank, you are informed before your account is closed. Mentioned below are some of the services/transactions that are not permitted if your account is inoperative:

• Change of residence
• Renewal of an ATM or debit card
• Addition or removal of a joint account holder
• Change of signature
• Transactions through internet banking or at a bank branch

DEA Fund: Unclaimed balances in savings/current accounts which have not been operated for 10 years are transferred to the Depositor Education and Awareness (DEA) Fund by the Reserve Bank of India (RBI).

To ensure your account stays active, you must conduct any financial transaction in the account such as check transactions, cash withdrawals, outbound bills, cash deposits etc., regularly.

How to reactivate an inoperative account? 
 

Banks cannot levy additional fees while reactivating an inoperative account according to RBI norms. To reactivate an inoperative account, you must submit a completed application form to the bank detailing the reasons for the account's inactivity. You can visit the nearest IDFC FIRST Bank branch or contact your relationship manager. You will require all KYC documents as well as ID and address proofs of all signatories to revive your account.

Once the above process is done and upon the bank official’s confirmation, you should make at least one financial transaction in your account. Some of the relevant financial transactions are:

• Deposit money using a cheque
• Deposits of cash into your account
• An ATM can be used to make a withdrawal or a deposit.
• Make an online transaction in your dormant account.

Claiming Unclaimed Deposits from the Depositor Education and Awareness Fund (DEAF)

This guide provides detailed information on how to claim funds that have been transferred to the Depositor Education and Awareness Fund (DEAF). We have outlined the process for individuals, nominees, legal heirs, and non-individual account holders to reclaim their money from inoperative or unclaimed accounts.

1. What is the Depositor Education and Awareness Fund (DEAF)?
   

   
   The Depositor Education and Awareness Fund (DEAF) is a fund established by the Reserve Bank of India (RBI) in 2014. As per RBI guidelines, the balances in bank accounts that have been inoperative or unclaimed for a period of 10 years or more are required to be transferred by the respective banks to the DEAF. This transfer includes the principal amount and any accrued interest.

   The primary objective of this fund is to promote depositors' interests and support depositor education and awareness initiatives.

   Even if your funds have been transferred to the DEAF, you or your legal heirs are fully entitled to claim the money at any time from the bank where the account was held. The bank will process the claim and refund the amount after proper verification.
    

2. How to find and claim funds from DEAF?
   

   
   Once an unclaimed deposit is identified, follow the appropriate process below to claim your funds.

   a. Claim by the Account Holder

   If you are the original account holder, you can reactivate the account and claim the funds by visiting your nearest IDFC FIRST Bank with a duly filled and signed claim form along with a recent photograph, valid Identity/Address proof, along with account details such as passbook, statement, cheque book etc.

   Important Note: Please carry the original copies of your identity and address proof for verification by the bank.

   b. Claim by a Nominee or Legal Heir

   In the event of the original account holder's demise, the nominee registered with the account or the legal heirs can file a claim by visiting the nearest bank branch with the required documents. Locate your nearest IDFC FIRST Bank branch here.

   The bank will process the claim as per its internal policies for settling accounts of deceased customers.

   c. Claim for Non-Individual Accounts

   For accounts belonging to a company, firm, institution, or trust, the claim process is as follows:

   • Submit Claim on Letterhead: The claim form must be submitted on the official letterhead of the company, firm, or institution.
   • Authorized Signatories: The form must be duly signed by all current authorized signatories.
   • Submit Re-KYC Documents: Fresh KYC (Know Your Customer) documents for the entity must be provided.

   The bank may request additional documents as needed to complete the verification process.
    

3. What is the processing time for a DEAF Claim?
   

   
   Upon successful submission and verification of all required documents, the bank will process your request. The average turnaround time for the amount to be credited to your account is approximately 10 working days. This timeline may vary depending on the complexity of the case.

Regular transactions are essential to keep your account active. Ensure that you use all your bank accounts regularly. With its customer-first values, IDFC FIRST Bank clearly mentions all the terms for keeping your account active in the welcome kit. You also enjoy zero charges on all commonly used Savings Account services, helping you save more. Opening a bank account online with IDFC FIRST Bank will also help in getting one of the highest bank account interest rates with a monthly interest credit facility for better returns over time. Apply now!