Inactive Account (2024)

FAQs

What is an inactive account? ›

An inactive savings account typically refers to a bank account that has had no customer-initiated transactions or activity for a time period of 12 months. When an account becomes inactive, it means that the account holder has not made any deposits, withdrawals, or other transactions within the specified time frame.

Inactive Accounts

Generally, an account is considered abandoned or unclaimed when there is no customer-initiated activity or contact for a period of three to five years. The specific period is based on the escheatment laws of each state.

Most of the time, a statute of limitations does not apply to dormant accounts. This means that the owner or beneficiary can claim the money at any time.

( For more information: A bank account becomes inactive if there is no transactions for 12 moths i.e. 1 year. And, a bank account becomes dormant if there is no transaction for 24 months i.e. 2 years. Note : Here automatic system generated interest credit will not be considered as transaction.

A bank account's holder is unable to conduct transactions once it is rendered inactive. However, dormant accounts are free of statute limitations. This means the beneficiary may withdraw funds at any time. You will need to activate your account to make a transaction.

An account holder must submit a written application to the bank to reactivate a dormant account. They can check whether their bank's mobile banking application offers the option of re-activating a dormant or inactive bank account.

Nonetheless, in cases where an account has remained dormant for more than a decade, the bank might have transferred the remaining balance or unclaimed deposits to the Reserve Bank of India's Depositor Education and Awareness Fund. To claim the funds from this fund, you will need to establish contact with the RBI.

Account owners can reclaim assets that were deemed inactive and transferred to the state. States have enacted escheatment statutes that govern the process of transferring unclaimed funds to the state and protect the unclaimed funds from reverting back to financial institutions.

Frequently, banks will notice a faulty account number or closed account and direct deposits will be returned to the sender or declined.

When one does not make any transaction with your savings or current bank account for more than 12 months, it is labeled as an inactive account. This means that if no deposits, withdrawals or other banking activities take place within this timeframe, the account is considered inactive.

What happens to money in inactive bank accounts? ›

The bank may be trying to alert you that your account is inactive. If the account remains inactive, it may be classified as abandoned, and your funds may be turned over to the state. This practice may also be referred to as escheatment.

An account is considered inactive if it does not have a “customer-initiated transaction” such as a deposit, withdrawal, ATM/point-of-sale transaction, or an online banking transaction for a period of 10 months.

An account becomes dormant if its owner does not initiate any activity for a specific period of time.

The money sits in a dormant account for a period of time, after which the state takes control of it through a process called “escheatment.” But you can get it back. The trick is finding out if you had a dormant account. Claim systems are in place, but some states aren't good at helping you find your money.

Calling your bank's customer service line will provide you with the same information, including whether your bank account is active or not. You must provide the customer service representative with certain information on your bank account in order to do this, like your name, bank account number, bank branch name, etc.

When these accounts are not effectively managed, they can serve as potential entry points for security breaches. This could lead to severe consequences like data breaches, unauthorised activities, or other security incidents.