Aspects of Dormant Account

Everything You Need to Know About a Dormant Account

A dormant account has had no financial activity for a long period despite posting interest. According to RBI regulations, a savings account would be deemed inactive or dormant if there have been no transactions for more than two years. Banks turn inactive accounts into dormant accounts in order to decrease fraud. When an account has been designated as dormant, you are not permitted to log onto it, make payments, transfer money, or withdraw money.

Generally, banks allow a dormant account to remain open for six months to one year to avoid closure. This is done to give the current owner some time to decide whether or not they want the account reopened.

Did you know ? Around less than ₹30,000 crore was lying in dormant accounts of banks, including cooperative banks, as on December 31, 2020.

What Is A Dormant Account?

A dormant account is an account that's been inactive for a certain period. Banks and other financial institutions use this information to determine whether or not the account should be closed since it may still have some monetary value.

The length of time an account must be inactive before it can be considered dormant varies from institution to institution, but usually, it's between 6 and 12 months. For an account to be considered active again, the user must re-activate it by following the appropriate steps.

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Once an account is considered dormant, it will no longer get any new transactions or updates, meaning that any remaining money is essentially frozen. Unless the user takes a specific action (like transferring money to another bank), the money will eventually be lost forever.

If you are the owner of a dormant bank account and wish to have it reopened, there are a few steps that you need to take. First, you will need to contact your bank and submit a request. Next, your bank will need evidence that you still own the account - such as copies of your monthly statements or your original signature on the opening documents. Finally, your bank will need proof that you are still interested in reopening the account - typically, this will involve sending them copies of recent statements or other relevant information.

Overall, it's important to remember that simply being aware of your dormant bank account may mean that you can open it up after a while. However, by following these simple steps, you can increase your chances of having your account reopened sooner rather than later!

Advantages of Dormant Account

Dormant accounts are a great way to keep your finances organized and secure. They allow you to save money when needed and avoid any potential fees or penalties that may come with having an active account.
Dormant accounts can also be a great way to prepare for future financial needs. Keeping your money safe will make you less likely to need it immediately. This will give you more time to find the right investment or budget plan best suited for your long-term goals.
Using a dormant account can also help protect your privacy. Many banks and other financial institutions offer password-protected dormant accounts, which means that only you and the bank officials authorized to access your account will be able to do so.
A dormant account is a great way to save money and continue to receive your bank's benefits even if you're not using it.

Also Read: What are the Different Digital Payment Methods?

Points To Keep in Mind For Dormant Account

There are a few things to keep in mind when using a dormant account:

You need to have a valid email address and bank account for the system to detect that the account is inactive.
Once the system detects the account is inactive, it will start disabling some of its features (like a direct deposit) until you reactivate it.
You can re-activate your account anytime by logging into your online banking account and clicking on the 'My Accounts' tab.
When you reactivate your account, you'll be able to access all the funds currently in it and any new deposits made after you last used it.

How To Work With Your Dormant Account?

If you have a dormant account, then there are a few things you need to know to work with it:

You are legally allowed to have a dormant account as long as you still meet the requirements of having an active bank account.
The money in your dormant account is still yours and can be used however you want.
You can open an online or mobile banking account to access your money quickly.
You can also use your dormant account to make regular payments, withdraw cash, and more. You need to know a few things about your dormant account to make the most of it.

Firstly, if your account is dormant for more than six months, it will be closed, and all your funds will be forfeited. Secondly, any activity on the account during that time (including transfers, messages sent or received, and activities such as voting) will not count towards the six-month deadline.

Also Read: Guide to Payment Gateways and How They Secure E-Commerce Transactions

How To Reactivate a Dormant Account?

If you'd like to re-activate your dormant account, you first need to contact customer support and provide them with the following information:

Your name
Your email address
The reason why you want to re-activate your account
The bank or financial institution that holds your inactive account

After receiving this information, customer support will open an investigation on your behalf and contact the bank or financial institution to request access to your account. Once they have received confirmation from the bank or financial institution that you are indeed the rightful owner of this account, customer support will send you an email confirming that your reactivation process has been completed.

Conclusion

Dormant Account is considered as unused or inactive for 24 months. The activities which help one keep account active include making deposits, transferring funds, withdrawal or even logging in account. This is important because it gives you peace of mind knowing that no one else can access your money without your permission.

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FAQs

Q: How to use a dormant account?

Ans:

You can use a dormant account to make purchases and make transfers at the same time. A dormant account has not been used in the past 90 days. To use a dormant account, you first must activate it by answering the question correctly. You can then use it to make purchases or transfers simultaneously as you would normally. You can also use a dormant account to receive payments. This is great for people who cannot receive payments from their employer due to a disability or illness.

Finally, you can also use a dormant account to transfer between different accounts. This is useful for people with multiple bank accounts or those who don't want to open a new account each time they need to make a purchase or transfer.

Q: Why do businesses have dormant accounts?

Ans:

The number of dormant accounts can vary dramatically depending on the type of business and specific business practices of the organization involved. For example, a travel agency may have thousands of dormant bank accounts, while a computer repair shop may only have a few. A good rule of thumb is to double-check your company's dormant account numbers before making any major purchases or taking on any new projects.

Q: When should you create a dormant account?

Ans:

To comply with industry-wide best practices, it is recommended that you create a dormant account when:

1) You are not using the account for any legitimate reason.

2) You are exploring a potential account opening.

3) You have reached your promotional limit on an existing account.

4) You are transitioning to a new billing or service provider.

5) You are transitioning to a new mobile phone number.

Q: Can you transfer funds from your bank to your dormant account?

Ans:

No, you cannot transfer funds from your bank to your dormant account.

If you have a dormant bank account and need to transfer funds to it, you should first contact your bank and know the procedure for transfer. Then, you can transfer funds to the dormant account.

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