Millions of bank accounts in India eventually become inactive due to prolonged non-usage. Under the rules laid down by the Reserve Bank of India, any bank account that remains untouched for 10 years or more is treated as an “unclaimed deposit.” The funds from such accounts are then transferred to the Depositor Education and Awareness Fund (DEAF) managed by the RBI.
However, depositors should not panic. The money does not vanish, nor does it become government property. The account holder, nominee, or legal heir can still reclaim the amount by completing the required verification and documentation process.
Savings and current accounts are marked as “inoperative” if there are no customer-driven transactions for two years. If this inactivity continues for a decade, the remaining balance is shifted to the RBI’s DEAF fund. Fixed deposits that remain unclaimed for 10 years after maturity are also transferred to the same fund.
Banks place restrictions on dormant accounts mainly to prevent misuse, fraud, identity theft, and unauthorised transactions. Even though withdrawals and transfers are blocked, ownership of the money remains with the depositor or nominee.
To simplify the tracking process, the RBI launched the UDGAM portal, which allows users to search for unclaimed deposits across participating banks.
5 Simple Steps To Recover Money From A Dormant Account
I. Check the UDGAM Portal
Start by searching for your inactive account on the RBI-backed UDGAM portal. Users need to register, log in, provide details, choose the relevant bank, and enter identifiers to locate the account.
II. Visit Your Bank Branch
After confirming the account details, visit the branch where the account was originally opened. Submit a request to reactivate the account and carry valid identity documents along with any required forms.
III. Complete KYC Verification
Banks usually ask customers to provide updated Aadhaar, PAN, address proof, and other account-related information. This verification process is mandatory before restoring access to the account.
Legal Heirs May Need Additional Documents
IV. Submit Legal Documents if Needed
If the original account holder has passed away, nominees or legal heirs may need to furnish documents such as a death certificate, succession certificate, or probate papers. In such cases, banks generally conduct more detailed verification checks.
V. Reactivate the Account and Claim Funds
Once the verification process is completed successfully, the bank may reactivate the dormant account or transfer the balance to another active account linked to the depositor. Any applicable interest may also be paid according to RBI norms and bank policies.
Important FAQs About Dormant Bank Accounts
Many people worry whether dormant accounts can impact their financial standing. The good news is that inactive accounts do not affect credit scores. However, most banks suspend internet banking access and digital transactions for security reasons. Interest on eligible deposits may continue even after the funds are transferred to the DEAF fund, depending on RBI guidelines and the type of account involved.
While some banks allow limited online reactivation services, physical verification and branch visits are still mandatory in most situations. Joint accounts, minors’ accounts, and accounts without passbooks can also be reactivated, subject to bank procedures and verification requirements.