Can you still claim money from a dormant bank account? RBI says yes — here's how

A banking account, when left unused for 10 years or more, is designated as an ‘unclaimed deposit’ under Reserve Bank of India (RBI) rules. All such funds are transferred by banking institutions to the Depositor Education and Awareness Fund (DEAF) maintained by the RBI.

Furthermore, the funds in such cases do not disappear or become government property. The account holder or the legal heir can still claim the funds in the account at any time by following several basic steps.

What happens after 10 years of inactivity?

In India, savings and current accounts become ‘inoperative’ after two years without customer-initiated transactions. If the account stays inactive for 10 years, the balance is transferred to the RBI’s DEAF fund. Similarly, fixed deposits that remain unclaimed for 10 years after maturity are also shifted to this fund.

Due to the time delay, financial institutions restrict transactions on dormant accounts. The objective of these steps is to protect the rights and interests of the primary account holder and to prevent financial fraud, unauthorised transfers, or identity theft.

Given that transfers, transactions and withdrawals are temporarily suspended, ownership of the funds remains with the depositor or nominee. To make recovery easier, the RBI introduced the UDGAM portal. This portal can help users track and trace unclaimed deposits across participating banks and financial institutions. Keeping these basics in mind, let us look at simple, effective steps to recover funds from dormant accounts.

5 steps to recover money from a dormant account

I. Search on the UDGAM Portal

Carefully check whether your dormant account or unclaimed deposit appears on the RBI-backed UDGAM portal. If required, you can seek professional guidance or use the official website. You have to register, log in, enter your details, select your banks and add identifiers to identify your account by clicking on the search button.

II. Visit the Bank Branch

Once you are clear about the credentials of the bank account, i.e., account number, IFSC code, basic details, primary bank, etc. Approach the bank where the account was originally opened and submit a reactivation request. For this, you may be required to provide original identification documents and complete forms.

III. Submit updated KYC documents

Provide the requested Aadhaar, PAN card, address proof, and account information for verification. This is vital because no account can be made available without intense verification and checks. It entails legal issues related to an individual's identity and fundamental rights.

IV. Submit legal proof if required

If you are a nominee or a legal heir, you may need to provide a death certificate, a succession certificate, or probate documents. This can make the cross-verification and background-check process a little more detailed and time-consuming compared to when the original account holder submits documents to unblock their own account.

V. Reactivate and claim the funds

Once verification and intensive checks are complete, the bank reactivates the account or transfers the funds to an active account, along with any applicable interest. This is done in accordance with the terms, conditions, and norms followed by financial institutions, as well as the RBI's guidelines.

In summary, regularly monitoring bank accounts and making occasional transactions can help avoid dormancy and protect your savings from unnecessary complications.

Top FAQs on dormant bank accounts and unclaimed deposits

1. Can banks permanently keep unclaimed deposits?
   No, the money will remain claimable by the depositor or their legal heir indefinitely.
2. Does a dormant bank account affect your credit score?
   No.
3. Can internet banking remain active on a dormant account?
   Usually, no. Most banks disable digital transactions, payments, and debits for security reasons.
4. Is interest still paid after funds move to the RBI’s DEAF fund?
   Yes, eligible interest may still be payable as per RBI and bank rules. This depends on the kind of account and other terms and conditions.
5. Can a dormant account be reactivated online?
   Some banks allow partial online reactivation, but KYC verification is usually required, making in-person visits essential. Therefore, in most cases, in-person visits are mandatory to reactivate bank accounts.
6. Do joint account holders need both signatures for reactivation?
   It depends on the account’s operating instructions and the essential terms and conditions in effect at the time of opening.
7. Can minors’ accounts also become unclaimed deposits?
   Yes, if there are no customer-initiated transactions for the prescribed period.
8. Is there any penalty for keeping an account inactive for years?
   Banks may levy inactivity-related service charges depending on their policies, associated terms and conditions.
9. Can you recover money without the original passbook?
   Yes, alternative identity and account proof may be accepted by banks. All banks require is complete clarification of the primary account holder's details and adherence to a set process to reclaim such funds.
10. What is the easiest way to prevent an account from becoming dormant?
    Make at least one customer-initiated transaction periodically. You should not leave your account completely unused or without transactions for months at a time.

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