The Torment of a Dormant Savings Account

Today, most of us have multiple savings accounts but we are unable to track each one of them due to lack of time or sheer laziness. Unfortunately banks don’t accept such excuses J So, irrespective of the reason, if ignored for two years, your savings or current account can become inoperative. This time period may vary from one bank to the other. For instance, ICICI Bank declares an account as dormant if no transaction is observed for 18 months, whereas HSBC considers 24 months for the same.

Interest credited or debited by the bank is not considered as transaction because it does not involve you or the third party.

What’s the inconvenience:

• You will not be able to withdraw funds from that account immediately or during an emergency.
• You cannot request for a cheque book, change your address, use internet banking,withdraw money via ATM card

What to do to keep the account active:

• If you don’t need the account, close it! You can apply for a savings account any time so it’s better to not drag along a dormant account.
• You can use your multiple accounts from going dormant by assigning each of them a goal or using them for a defined purpose, such as bill payment from one account, investment via second account, loan repayments with the third and so on.
• In the less used account, you can transfer the extra money earned as interest, savings or money back. This will keep your account operative and help you save more.

How to reactivate

In case your account goes dormant, you can get it reactivated. There are no charges for activation, but you are required to visit the branch and follow the below-stated steps:

• You need to write an application stating the reason for not transacting for two years and the application should be signed by all the joint account holders.
• Reactivation is similar to opening a new account and requires you to submit all Know Your Customer (KYC) documents, such as photographs, address proof, passbook and cheque book.

Points to note

• Your savings/current account cannot be considered as dormant before two years of inactivity.
• Even if your account is dormant, it is always credited with regular interest on the balance.

Your account will not be deemed dormant if you have directed the bank to credit the interest earned on fixed deposit or term deposit into your savings account, as it is considered as a valid transaction.