When does a savings or current account become inoperative and how long can reactivation take?

A savings or a current bank account can be treated as inoperative if there are no ‘customer-induced transactions’ in the account for a period of over two years, according to the Reserve Bank of India (RBI) circular on ‘Inoperative Accounts/Unclaimed deposits in Banks-Revised Instructions’ dated January 1, 2024.

The ‘customer induced transaction’ include the following:

• A financial transaction initiated by or done at the behest of the account holder by the bank/ third party or

• A non-financial transaction, or

• KYC updation done in face-to-face physical mode or through digital channels such as internet banking or mobile banking application of the bank.

As per the RBI's circular, where there is no customer-induced transaction in the last one year, banks are required to inform such customers through letters or email or SMS that the account shall become ‘inoperative’ if not operated in the next one year.

In such a case, the account holder(s) would be required to submit the Know Your Customer (KYC) documents afresh for reactivating the account.

If the customer informs the bank the reasons for not operating the account, the bank shall continue to classify the account as operative for one more year and the account holder shall be advised to operate the account within a period of one year.

However, the accounts will be classified as ‘inoperative’, in case no customer-induced transactions are undertaken during the extended period.

The above information was shared by Union Minister of State for Finance, Pankaj Chaudhary, in a written reply to a query in the Rajya Sabha on Tuesday, December 16, 2025.

Chaudhary was responding to a query on "whether over 1.8 lakh savings/current accounts have been frozen in the last six months merely for being dormant, causing severe hardship to middle and lower-middle class citizens without prior notice."

As per RBI , banks are required to contact the account holders of inoperative accounts through letters, email or SMS on a quarterly basis. Banks are also required to undertake special drives periodically to find out the whereabouts of the customers, their nominees or legal heirs in respect of inoperative accounts

How long can reactivation take?

Banks are required to activate an inoperative account within three working days.

"RBI has also prescribed time limit of three working days for activation of inoperative accounts, from the receipt of the complete application," Chaudhary said.

He further said that a convenient process for activation of inoperative accounts has also been defined by RBI to ensure easy reactivation of inoperative accounts including for customers in rural areas and senior citizens.

"Customers are required to undertake fresh KYC to activate their inoperative accounts and the same can be done at any of the branches of the concerned bank. Banks also offer facility for updation of KYC through Video-Customer Identification Process (VCIP) and banks also use services of their business correspondents (BCs) for activation of inoperative accounts as prescribed by RBI in its directions," the minister said.

A bank can activate the inoperative accounts after adhering to the KYC instructions provided by RBI such as, Customer Due Diligence (CDD), customer identification, risk categorisation, etc.