Banking Exam Question - What is 'Dormant Account' in Banking? Explain the Procedure of Re-opening of Inactive Account

Introduction - Inactive Account or Dormant Account

In general, a low-balance savings account which has shown no activity (deposits and/or withdrawals) over a long period, other than posting of the interest and/or service charges. Statute of limitations usually does not apply to dormant accounts, and their funds can be claimed by their owner or beneficiary at any time.
 

A dormant account has had no activity for a long period of time, other than posting interest. A statute of limitations usually does not apply to dormant accounts, meaning that funds can be claimed by the owner or beneficiary at any time.

When a person do not use the account for longer period of time or inactive status of bank account is termed as 'dormant account'. The account may receive normal deposits during this phase but account holder can not make transaction especially taking out money. This is like 'in is allowed but out is not permitted'.

What is a dormant account in a bank?
In general, a low-balance savings account which has shown no activity (deposits and/or withdrawals) over a long period, other than posting of the interest and/or service charges. Statute of limitations usually does not apply to dormant accounts, and their funds can be claimed by their owner or beneficiary at any time.

What are inoperative and dormant accounts?
A savings as well as a current account is classified as 'inoperative' or 'dormant' if. there are no transactions in the account for over a period of two years. Interest. credited by the bank on the balance in the account and any charges debited by the bank is not considered as transactions for this purpose. 

Can a dormant bank account be reactivated?
If there have been no transactions in your savings bank account for two years, except for interest payments credited by your bank, the bank will classify your account as inoperative or dormant. ... You can reactivate your account anytime to be able to operate it or close it.

Can you deposit money in a dormant account?
Dormant accounts allow crediting of money, but you cannot withdraw from it. The individual should submit updated KYC to activate the account. Dormant accounts can be reinstated by conducting operations through it. One could jolly well deposit cash.

How long does it take for your account to be dormant?
According to various expert, current accounts are often marked "dormant" after a year, but savings accounts can go untouched for between three and five years.