UNDERSTANDING DORMANT OR INACTIVE ACCOUNT

Mr. Ojo opened account in XZX bank and operated it for few years before he travelled to United State of America for greener pasture. After many years he came to see his family in Nigeria. He needs to open account for financial transactions. He went to XZX bank. On entering the banking hall, one of the bank staff recognized him and quickly ushered him to Customer service’s table. Mr. Ojo said he used to have an account with the bank before he travelled oversea. It is more than five year now, ‘is it possible for me to operate the account?’ Yes, answered the Bank Officer. Your account has been classified as DORMANT but you can still reactivate it. With this information; Mr. Ojo did all the processing for his account reactivation and he was able to access the account within 24 hours.

With above scenario, Most of us have savings accounts. At times we end up having many bank accounts. It is not easy to keep track of multiple savings accounts, in fact it breeds confusion. Ignoring a bank account for a long period can cost you time, money or both. In this write up I explain the meaning of Inactive and Dormant account, why banks make them dormant and process of reactivating them.

What is Dormant or inactive accounts? These can be described as those accounts that have witnessed no transactions for months or few years. The process of identifying dormant or inactive accounts has been programmed into the computer, which automatically identifies the account and blocks it accordingly.

How can you prevent account from becoming inactive or dormant? Keep using your account before becoming inactive or dormant. Carry out transactions in the account once a while. If the account is no longer useful, best is to close it.

Why does the bank make account inactive or dormant? The banks make account dormant or inactive to safeguard your money from any risk of fraudulent transactions by dubious bank employees. For safety purpose, banks group such accounts into single pool and maintain detail of inactive account in a separate ledger.

Is making account dormant same as freezing it? No. freezing of a bank account means there will be no transaction in the account until further notice. All payment will be stopped even in case of cheques issued earlier by account holder. However, any deposit already in the pipeline can be credited. Regulator or courts have right to order a freeze on bank accounts. You must have a favourable court verdict in order to unfreeze your bank account.

What happen when account becomes inactive or dormant? You can’t perform several operations. In case of inactive account, you cannot request that a cheque book be issued. Once account turns dormant, the number of restrictions increases even further. You can’t do any transaction or make any request on the account again.

What about interest on the bank account? Even after your account turns inactive or dormant, interest is still credited to saving account regularly.

Does bank inform customer on making account dormant? Normally, the bank will inform the customer two or three months prior to account becoming inoperative. If still no action, the bank will declare the account inactive and notify you.

Process of reactivating Dormant or Inactive accounts.

The actual process of reactivation may vary from bank to bank. Below is the normal process of reactivating inactive or dormant account.

§  To reactivate dormant account, the customer concern must identify himself/herself properly and write a letter demanding for reactivation of account. This should be confirmed with bank’s record.

§  Give satisfactory reason for allowing the account to be dormant.

§  The bank customer service officer retrieves the account opening form.

§  The customer completes a fresh set of mandate form; both signature and address.

§  The customer is then allowed to pay into the account after the blocking has been removed.

The bank will debit the customer’s account with the reactivation charge.