An account is considered dormant when it remains inactive for an extended period. However, the inactive status does not apply merely because the holder has not visited the branch or stopped checking the balance.
As per the Reserve Bank of India (RBI), when no transactions happen in a bank account for more than a period of two years, it becomes inactive. However, the balance in the account remains yours. RBI has provisions for customers to retrieve the sum from such accounts through directions implemented by the banks.
What is a dormant account?
A bank account becomes inoperative when there is no customer-induced transaction for more than two years, which does not include the interest credited by the bank or the bank-levied charges.
To be able to use such accounts again, customers have to contact the bank for reactivation. The money, although, remains yours, the banks may put restrictions on such accounts, which disable withdrawals or transfers.
What must the users do?
The users may refer to the bank when they have to access an account rendered unused for more than two years. The bank, as per the procedure, has to provide a KYC updation facility for reactivation. RBI has instructed all the banks to facilitate reactivation across all branches, including non-home branches, and to help customers claim the unclaimed funds.
RBI mandates the classification of such unused accounts as inoperative as a measure to counter the fraud risks often associated with such neglected accounts. Therefore, when a user leaves the bank account unused in cases which may include a job change or city transfer, any funds in the account get locked for debit unless the due process is followed.
Banks may also provide KYC updation through the Video-Customer Identification Process (V-CIP).
Also, in June 2025, RBI allowed Business Correspondents to help with KYC updation and activation of inoperative accounts.
In summary, when the account becomes inoperative, the customers should visit the branch, following which it enables KYC updation as per its requirements. The customer has to provide the required documents, and once the formalities conclude, the bank is supposed to reactivate the account within three working days as per RBI’s guidance.
10-year threshold
The two-year inactivity period is not the only crucial deadline. The banks also have a way to deal with deposits unclaimed for 10 years. Such funds get transferred to the Reserve Bank of India’s Depositor Education and Awareness (DEA) Fund.
This also does not mean the money is lost. The claimants can use RBI’s UDGAM portal to search for forgotten funds in banks. The user can search for the lost/forgotten account using the required details.
Once the information is available through the portal, the claimant should visit the respective bank and follow the due procedure to retrieve the rightful amount.
