Dormant and Inactive Bank Accounts: What Happens and How to Reactivate

The two-stage timeline

An account with no customer-initiated transactions for 12 months is classified inactive. If another 12 months pass with still no activity (24 months total), it becomes dormant. Interest continues to accrue on a savings account even while dormant, and the balance doesn't disappear or reduce.

Reactivating a dormant account

Reactivation requires visiting the branch (or in some cases net banking) and completing a fresh KYC verification - the bank is required to process a complete reactivation request within a few working days, and importantly, cannot charge a fee for reactivating an inoperative account under RBI rules.

What happens after very long inactivity

If an account remains unclaimed and inactive for over 10 years, the bank transfers the balance (with accrued interest) to RBI's Depositor Education and Awareness Fund (DEAF) - but this isn't a forfeiture: an eligible claimant can still approach the bank to reclaim these funds even after the transfer.

(Timelines and DEAF transfer rule checked as of September 2026, per current RBI guidelines.)

The takeaway

A forgotten old account (from a previous employer's salary account, for instance) isn't lost money - it just needs a KYC refresh to reactivate, even if it's been inactive for years.