In today’s fast-moving world, many people have multiple bank accounts — salary accounts, savings accounts, and even business accounts. However, when you change jobs or open a new account, your old account may be left unused for a long time. Over time, you might completely forget about it.
But letting a bank account sit idle for too long can lead to issues. The Reserve Bank of India (RBI) has clear rules regarding inactive and dormant accounts. This guide explains what happens to your account after two years of inactivity, how to reactivate it, and how to prevent it from becoming dormant.
What Is a Dormant Account?
A dormant account is a bank account where there have been no customer-initiated transactions for two consecutive years (24 months).
Inactive Account: No transactions for 12 months.
Dormant Account: No transactions for 24 months.
Important:
Bank-credited interest, automatic deductions, or penalty charges do not count as transactions.
To keep your account active, you must perform at least one customer-initiated transaction such as a deposit, withdrawal, or fund transfer.
Banks usually start sending reminders after 12 months of inactivity to alert customers before the account becomes dormant.
What Happens When Your Account Becomes Dormant
Once an account is officially classified as dormant, the bank places certain restrictions on it to ensure security and compliance.
- Debit Freeze
You cannot withdraw money using an ATM card, cheque, UPI, or online transfer.
Debit transactions through digital channels are disabled until reactivation.
- Blocked Non-Financial Transactions
Even non-financial activities like updating your address, mobile number, or email cannot be done until the account is reactivated.
- Transfer of Funds After 10 Years
If a dormant account remains inactive for 10 years, the balance is transferred to the Depositor Education and Awareness Fund (DEAF) managed by the RBI.
This also applies to unclaimed fixed deposits.
The money remains safe, and you can claim it later by approaching your bank, though the process may involve additional verification and paperwork.
- Possible Impact on Credit Score
Dormancy itself does not harm your credit score.
However, if unpaid charges or penalties accumulate and remain unpaid, they could turn into outstanding dues, which might be reported to credit bureaus and affect your credit history.
Interest and Charges for Dormant Accounts
Even after your account becomes dormant:
Interest Continues to Accrue:
Savings accounts will still earn interest, and it will be credited automatically.
No Minimum Balance Penalty:
RBI rules prohibit banks from charging penalties for non-maintenance of minimum balance in dormant accounts.
No Reactivation Fee:
Banks cannot charge you for reactivating a dormant account.
How to Reactivate a Dormant Account
Reactivating a dormant account is simple, free, and secure.
Steps to Follow:
- Visit Your Bank Branch:
While some banks allow online initiation, it’s best to visit the branch for faster and safer processing. - Submit a Written Request:
Include your account number.
Attach a valid identity proof such as Aadhaar, PAN, or passport.
State the reason for inactivity.
- Complete KYC Verification:
The bank will verify your documents to confirm you are the rightful account holder. - For Joint Accounts:
If the account is jointly held, all account holders must give approval to reactivate it.
Once verified, the bank will lift the restrictions, and you can use the account again as normal.
How to Prevent Your Account From Becoming Dormant
Preventing dormancy is always better than dealing with reactivation later. Here are some simple tips:
- Perform Regular Small Transactions
Even a tiny deposit, withdrawal, or transfer once a year is enough to keep your account active.
- Set Up Automatic Transfers
Use standing instructions to automatically transfer a small amount (e.g., ₹100) to the less-used account every few months.
- Link Recurring Payments
Connect the account to subscriptions or utility payments like mobile bills or OTT platforms to ensure periodic activity.
- Inform the Bank
If you know the account will not be used for a while, inform the bank and request them to keep it active.
- Consolidate Multiple Accounts
If you have too many accounts, close the ones you don’t need to avoid confusion and maintenance issues.
How to Track Forgotten or Unclaimed Accounts
If you suspect that you have an old account or fixed deposit you’ve forgotten about, you can check through RBI’s centralized portal for unclaimed deposits.
Using this platform, you can search by providing details like your name and bank information to trace any unclaimed funds.
Timeline of Account Status
Duration of Inactivity Account Status Required Action
12 months Inactive Perform a transaction to keep it active
24 months Dormant Reactivate through branch and KYC
10 years Funds moved to DEAF Claim money via bank with documents
Key Takeaways
An account becomes inactive after 12 months and dormant after 24 months of no customer-initiated transactions.
Dormant accounts face restrictions such as debit freezes and blocked online services.
Funds in accounts dormant for 10 years are moved to RBI’s DEAF fund but can still be claimed later.
Reactivation is free, but requires KYC verification.
Regular small transactions or automatic transfers can easily prevent dormancy.
FAQs About Dormant Bank Accounts
- What is a dormant account?
A bank account with no customer-initiated transactions for 24 months. - Does a dormant account earn interest?
Yes, it continues to earn interest on the balance. - Do bank deductions or interest count as transactions?
No, only customer-initiated actions like deposits or withdrawals count. - How can I reactivate my dormant account?
By visiting the branch, completing KYC, and performing a transaction. - Is there a fee for reactivating a dormant account?
No, reactivation is completely free. - What documents are needed for reactivation?
Valid ID proof, address proof, and a written application. - What happens if my account stays dormant for 10 years?
The funds are transferred to the RBI’s DEAF fund but can still be claimed. - Can I claim money transferred to DEAF?
Yes, by approaching the bank with proper documents. - Does a dormant account affect my credit score?
Only if unpaid charges result in outstanding dues. - Can I reactivate my account online?
Most banks require you to visit the branch for security reasons. - Do joint accounts need all holders for reactivation?
Yes, approval from all account holders is required. - How often should I transact to prevent dormancy?
At least once a year. - What is the minimum amount for such a transaction?
Even ₹10 is enough to keep the account active. - Can fixed deposits become dormant?
Yes, unclaimed fixed deposits for 10 years are transferred to DEAF. - How do I check if I have an old dormant account?
Use RBI’s unclaimed deposit portal or contact your bank. - Will my debit card work if my account is dormant?
No, debit card services are frozen. - Can dormant accounts be closed directly?
No, they must be reactivated before closure. - Do utility payments prevent dormancy?
Yes, if they are set up as recurring transactions. - What if I have multiple inactive accounts?
Consider consolidating them into one or two active accounts. - How long does it take to reactivate an account?
Typically 1–3 working days after completing KYC.
Final Thoughts
A dormant bank account may seem harmless, but it can lead to complications such as frozen transactions, unclaimed funds, and additional paperwork. By staying proactive and making small, regular transactions, you can easily avoid dormancy.
If your account has already turned dormant, don’t worry — simply visit your bank branch, complete the necessary KYC steps, and reactivate it free of cost.
Remember, staying active and informed is the best way to protect your hard-earned money.
