In a very layman language, the term "dormant" refers to an inactive or inoperative state, i.e., one in which no recent transactions have been made. I have an account which has become inoperative since it hasn’t been used for years. But even though we feel like we understand the inoperative account meaning, we actually need to understand it in depth. I will help you understand it, here.
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What is inoperative account?
A savings or current account must be classified as inoperative or dormant if there have been no transactions for more than two years, according to RBI guidelines. To further explain the situation, RBI states "Both the type of transactions, i.e., debit as well as credit transactions provoked at the expense of consumers as well as third parties, should be taken into consideration when designating an account as "inoperative." However, the bank's service fees or interest credits shouldn't be taken into account ".
Meaning of inoperative account
However, it is considered a customer-induced transaction whenever the interest on the Fixed Deposit account is deposited to the Savings Bank accounts per the customer's instruction. It should be noted, nevertheless, that certain banks maintained internal policies or time limits before an account could be deemed inactive or dormant. However, the two-year timeframe mentioned above is relevant in accordance with RBI norms, thus bankers should examine their administrative circulars for this purpose. Therefore, inactive accounts or inoperative accounts are equivalent under RBI criteria.
What is the purpose behind classifying the account as dormant or inoperative ?
Segregating inactive accounts serves to reduce the likelihood of fraud and other crimes. Simply to alert the dealing staff to the increasing account in such an account, the classification is made. As a result, it is possible to monitor transactions in these accounts more closely in order to detect fraud and file a Suspicious Transactions Report. The customer, however, is unaware of the entire procedure.
Can a customer issue a cheque on a dormant account ?
Yes. However, while paying such checks, the bank is obligated to use its judgement and apply due diligence in determining the legitimacy of the transaction, the veracity of the signature, etc.
Can Bank charge for account remaining as dormant?
Yes, the bank may impose fees in accordance with the announced fee schedule.
Can bank charge for reactivating the same i.e. making the account again an active account?
Banks are not permitted to impose any fees or charges when turning a dormant or inactive account into an active one.
I hope I was able to explain to you about inoperative account meaning.
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What is Inoperative Account?
Vaani
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2 Year
2022-10-17T10:48:41+00:00 2022-10-17T10:48:43+00:00Comment
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