Understanding Bank Account Inactivity: What Every Account Holder in India Must Know

May 2, 2025 By: Nisha Chawla

Many people in India have savings accounts that they barely use. Some are open for salary credits, government subsidies, or just as a backup. However, most people don’t realise that if they don’t use their bank account for a specific period, the account can become inactive or dormant. This change in status doesn’t just affect the ease of using the account—it also has implications for security, transaction restrictions, and even the retrieval of your funds.

This article explains in simple language how long a bank account can become inactive, what happens when it does, and what you must do to keep your money safe and accessible.

What Does an Inactive Bank Account Mean?

A bank account becomes inactive when there have been no customer-initiated transactions for a specific time. It doesn’t mean the money vanishes or the bank closes your account, but it affects how you use it. The account becomes limited in functioning, requiring additional steps to reactivate it.

Per Reserve Bank of India (RBI) guidelines, an account is marked inactive to protect customers and prevent fraud or unauthorised use. However, for the average person, this might create confusion and inconvenience, especially if they are unaware of the rules.

How Many Days Make a Bank Account Inactive?

Let’s come straight to the main question.

According to RBI guidelines, a bank account is marked inactive if there are no customer-initiated transactions for 12 months. However, this is only the first step.

If there is no activity for 24 months, the account becomes dormant or inoperative 1.

Here’s a breakdown:

• Inactive Account: No transactions for 12 months (1 year).
• Dormant Account: No transactions for 24 months (2 years).

It’s important to note that only customer-initiated transactions are considered. This includes:

• Depositing or withdrawing cash from the branch or ATM
• Online fund transfer (NEFT/IMPS/UPI)
• Cheque transactions
• Mobile banking or net banking activity

Auto credits like interest or subsidies are NOT counted when calculating inactivity.

Why Do Banks Make Accounts Inactive?

There are several key reasons:

1. Customer Safety

If an account remains unused for long time, the risk of fraudulent use increases. Making it inactive adds an extra layer of verification before allowing access.

2. Prevent Money Laundering

Criminals can sometimes misuse long-inactive accounts for illegal transactions. Keeping track helps reduce such cases.

3. Operational Efficiency

Banks have to maintain millions of accounts. Marking unused ones as inactive helps them manage customer data more efficiently.

What Happens When Your Bank Account Becomes Inactive?

An inactive or dormant account is not closed, but you will face restricted access.

Limited Services Include:

• ATM cards may stop working.
• Online and mobile banking access may be blocked.
• You may not be able to withdraw or deposit without visiting the branch.
• Chequebooks may be disabled.
• Auto-debit instructions (like EMI or SIPs) may fail.

Even interest earned on your savings will continue, but you cannot withdraw it unless the account is reactivated.

This situation can become even more complicated if the account holder is elderly, living abroad, or unaware of the dormant status.

What is a Dormant Account?

As mentioned, if an account remains inactive for 24 months, it becomes dormant or inoperative. This status is more serious than “inactive” because:

• KYC documents might need to be updated
• The bank may require a written request and a branch visit to reactivate it
• Transactions may require extra verification or signatures

Dormant accounts are subject to higher scrutiny, and any attempt to use them without reactivation may result in rejection or account freezing.

How to Keep Your Account Active

To avoid the headache of reactivating your account, you should keep it active by doing at least one customer-initiated transaction every 12 months.

Here are a few easy steps:

• Transfer a small amount using UPI, NEFT, or IMPS
• Withdraw or deposit even ₹100 via ATM or branch
• Use the mobile app or net banking to pay bills
• Send or receive a cheque
• Link your account to a mutual fund SIP or monthly recharge

These small actions are enough to reset the inactivity period.

How to Reactivate an Inactive or Dormant Account

If your account is already inactive or dormant, don’t panic. It can be reactivated by following a few steps.

Step-by-Step Process:

1. Visit the bank branch in person (most banks need a physical presence for dormant accounts).
2. Submit a written request to reactivate your account.
3. Provide KYC documents such as:
   • Aadhaar card
   • PAN card
   • Passport-size photograph
4. Make a transaction (like a small deposit or withdrawal) as proof of activity.
5. If your signature has changed, you may have to re-register your updated signature.

After verification, the bank will usually activate the account within 1–3 working days.

Can Money Be Lost in Inactive Accounts?

Your money is safe, even if your account becomes inactive or dormant. RBI regulates Indian banks and have strict rules for handling such accounts.

However, if the account remains untouched for 10 years, the money is transferred to the Depositor Education and Awareness Fund (DEAF), managed by the RBI 2. You can still claim the money, but the process becomes longer and involves extra paperwork.

What About Joint Accounts or Accounts of Deceased Persons?

If the account holder passes away and the account is not operated for two years, it will also become dormant. In such cases:

• The nominee or legal heir must apply for claim settlement.
• The death certificate and legal documents (like a succession certificate or a will) are required.
• The account cannot be operated or reactivated casually.

Joint accounts follow the same rule—if both holders stop transactions, the account turns dormant after 24 months.

RBI Guidelines on Inactive and Dormant Accounts

The RBI has issued clear directions to all banks on managing inactive and dormant accounts:

• Banks must inform customers before marking accounts dormant.
• Reactivation must be free of cost.
• Banks must conduct due diligence before allowing any transactions from such accounts.
• Customers must be given proper facilities to reclaim their funds.
• Periodic communication must be maintained with the account holder.

Final Thoughts

Inactive and dormant bank accounts are more common than you think, especially in India, where people hold multiple accounts due to jobs, government schemes, or joint family needs. Knowing the rules around inactivity helps protect your money and avoid problems during emergencies.

Whether it’s your first salary account, a pension account of a senior citizen, or a secondary account used for investments, make sure you keep it active with simple transactions once every year.

This small step can save you a lot of time and trouble later.