Many people in India have bank accounts they no longer use. Some were opened years ago for a job, scholarship, or fixed deposit and then forgotten. Over time, these accounts become dormant. What looks harmless can create problems for both customers and banks.
Today, the Reserve Bank of India (RBI) treats dormant and unclaimed accounts as a serious issue. RBI now focuses on customer protection, fraud prevention, and strict compliance. This guide explains dormant accounts, unclaimed deposits, the UDGAM portal, and how banks safely reactivate accounts.
What Is a Dormant Bank Account in India?
A bank account becomes dormant when the customer does not initiate any transactions for two consecutive years. This includes savings and current accounts.
Dormancy does not mean the account is closed. The money stays safe in the bank. However, the bank restricts transactions to prevent misuse. You cannot withdraw or transfer funds until you reactivate the account.
Banks mark accounts dormant to reduce fraud and protect customers.
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Why RBI Is Concerned About Dormant Bank Accounts
Dormant accounts create risks when banks ignore them for long periods. RBI highlights three major concerns.
- Customer information becomes outdated. Phone numbers, addresses, and even identity details may change.
- Transaction monitoring stops. Criminals may try to misuse dormant accounts once they reactivate them.
- Sudden fund movement after reactivation can raise red flags for money laundering.
Because of these risks, RBI now treats account reactivation as a high‑risk activity, not a routine task.
Also Read: RBI’s New Cheque Clearing Rule
What Are Unclaimed Deposits Under RBI Rules?
Dormant accounts can turn into unclaimed deposits if they stay inactive for a long time.
When a savings or current account remains inactive for ten years, or a fixed deposit stays unclaimed for ten years after maturity, the bank classifies the balance as an unclaimed deposit.
Banks must then transfer the amount to the Depositor Education and Awareness (DEA) Fund, created by RBI in 2014.
This rule applies to:
- Savings and current accounts
- Fixed and recurring deposits
- Cash credit balances
- Unused prepaid card balances
- Unreconciled ATM transactions
Even after the transfer, customers still own the money.
Ways Customers Can Find Unclaimed Deposits Using the UDGAM Portal
To help people find forgotten money, the RBI launched the UDGAM Portal.
UDGAM stands for Unclaimed Deposits – Gateway to Access Information. It allows users to search unclaimed deposits across multiple banks in one place.
Steps to Use the UDGAM Portal for Unclaimed Money
For individuals:
- Register with your name and mobile number
- Search using PAN, Aadhaar, Passport, Voter ID, Driving Licence, or Date of Birth
- If documents are unavailable, you can search using your address
For companies or trusts:
- Use the entity name
- Provide PAN, CIN, or authorized signatory details
UDGAM only helps you locate deposits. You must contact the bank to claim the money.
Also Read: New RBI Banking Rules
How to Reclaim Unclaimed Money From a Bank
Once you find an unclaimed deposit, the recovery process is simple.
Three Easy Steps to Reclaim Your Funds
- Visit any branch of the bank where the account exists. You do not need to visit your home branch.
- Submit the claim form with updated KYC documents, such as Aadhaar, PAN, or Passport. Legal heirs must submit succession or nominee documents.
- The bank verifies the details and releases the funds. Interest applies based on RBI guidelines and the account type.
Banks do not charge fees for reclaiming unclaimed deposits.
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Why Bank Account Reactivation Is a High‑Risk Activity
Reactivating a dormant account carries risk for banks.
When an account suddenly becomes active, banks must confirm:
- The customer’s identity
- The source of funds
- The purpose of transactions
Criminals sometimes use old accounts for fraud or money laundering. RBI expects banks to re‑verify KYC and reassess risk before allowing transactions.
How AML Software Helps Banks During Account Reactivation
Banks no longer rely on manual checks alone. They now use AML software to manage risk during reactivation.
AML systems help banks:
- Start transaction monitoring immediately after reactivation
- Track unusual behavior from the first transaction
- Flag sudden large deposits or withdrawals
- Maintain detailed audit records for RBI inspections
This approach reduces human error and strengthens compliance.
How Technology Platforms Support RBI Compliance
Modern compliance platforms help banks follow RBI rules smoothly.
Solutions like BeFiSc integrate:
- Identity verification
- Risk signals
- AML monitoring
- Automated audit logs
These tools work inside the bank’s workflow. Banks do not treat compliance as an afterthought. Instead, they build it into every step of reactivation.
This method saves time and improves accuracy.
Also Read: RBI’s New Rule on Current Coins
How Dormant Account Reactivation Benefits Customers
Reactivating dormant accounts offers clear benefits to customers.
Customers can:
- Recover forgotten savings
- Earn interest on idle money
- Consolidate finances
- Avoid account closure risks
The UDGAM portal and simplified claim rules make the process easier than before.
Why RBI’s Focus Improves the Banking System
RBI’s focus on dormant and unclaimed accounts improves trust in the banking system.
It ensures:
- Better customer protection
- Lower fraud risk
- Stronger AML controls
- Transparent recovery of funds
By enforcing these rules, RBI aligns Indian banking with global standards.
Conclusion
Dormant bank accounts no longer stay ignored. RBI now monitors them closely to protect customers and prevent misuse. With tools like the UDGAM portal, customers can easily find and reclaim forgotten money.
At the same time, banks must follow strict KYC and AML checks during reactivation. This balance ensures safe recovery, strong compliance, and financial security for everyone involved.
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