A bank account is not just a convenience; it’s necessary for everyone, including employees and ordinary people, to access government benefits. Without an active account, you could miss out on these crucial resources.
However, opening an account is just the beginning. It’s crucial to keep it active to ensure it remains functional. Your savings or current account is not just a number; it’s an integral part of the banking system. If unused for an extended period, it becomes ‘inactive.’
What happens to the money in an inactive account, and how can the account be reactivated? Let’s find out the answers to these questions.
Inactive Accounts: A bank account is considered inactive if no transactions occur for over two years. The bank keeps these inactive accounts in a separate record during this time.
Unclaimed Deposits: If no transactions have been made in a savings or current account for ten years or if a fixed deposit is not claimed within ten years of maturity, the balance is referred to as an ‘unclaimed deposit.’
These funds are transferred to the ‘Depositor Education and Awareness (DEA)’ fund managed by the Reserve Bank. However, customers or nominees can claim this money and the interest earned.
Does the bank pay interest on inactive account balances? The RBI has directed banks to pay interest on inactive savings accounts. If a fixed deposit matures and is unclaimed, interest is paid on the unclaimed amount at the savings account rate.
To keep the account active, you must carry out ‘Customer Induced Transactions.’ These include financial transactions such as cash deposits, withdrawals, NEFT, RTGS, NACH payments, and dividend payments.
Similarly, non-financial activities like checking your balance, making an inquiry through an ATM or logging into your bank’s mobile or internet banking app also count as transactions. Updating the Know Your Customer (KYC) details will keep your account active.
What happens if the account is inactive? If your account is inactive, you must submit your KYC documents to the bank before making any withdrawals or other transactions.
How to reactivate an inactive account:
- Take your latest KYC document and go to the bank.
- Ask the concerned authorities to reactivate the account.
- The bank will verify your KYC documents.
- Once the account is reactivated, you will receive a notification via SMS or email.
- The bank usually processes the activation within three days after submitting the required details.