If you have ever opened a bank account, you may have heard the term “dormant account.” But what exactly does it mean? A dormant account refers to an account that has been inactive for a certain period, typically due to no transactions, deposits, or withdrawals. This blog will explain everything you need to know about dormant accounts in Nepal and how you can manage it effectively.
What is a Dormant Account?
In simple terms, dormant accounts are those accounts that have been inactive for a long period of time, usually six months or one to two years. This means if there have been no deposits, withdrawals, or other transactions during that period, the bank may consider those accounts as dormant accounts. When an account becomes dormant, the bank restricts it. You cannot make withdrawals or transfers, but money can still be credited to the account.
According to the Nepal Rastra Bank, saving accounts that remain inactive for 3 years and current accounts with no transactions in six months will be classified as dormant accounts by banks and financial institutions.
Why Bank Accounts Become Dormant?
There are several reasons an account may become dormant. One common reason is a lack of activity: if no deposits or withdrawals occur over an extended period, the account may be classified as dormant.
What Happens If an Account Is Dormant?
If an account is dormant, you are not allowed to withdraw money or make transfers from the account. Only credit transactions such as salary or deposits are allowed. Also ATM withdrawals are restricted. But the accounts and deposits remain safe. You can use it after reactivation.
How to Reactivate a Dormant Account?
Reactivating a dormant account is simple and straightforward.
Visit Bank Branch
Visit the bank branch and ask for the reactivation of a dormant account.
Essential Documents and KYC Update
Submit the valid identification documents, such as citizenship and NID, and complete the KYC update as required by the bank.
Update Account Information
Make sure that all your personal details, such as name, address, and contact number, are up-to-date and correct.
Your account will be reactivated and will be resumed after the bank verifies your documents and KYC details.
Tips for Preventing Your Account from Becoming Dormant
Here are some simple tips to ensure your account stays active:
- Monitor Your Account Regularly
Check your account activity through mobile banking, internet banking, or bank statements to stay informed about transactions. - Make Regular Transactions
Carry out deposits, withdrawals, or digital transactions time and again to keep your account active. - Keep Your Account Information Updated
Inform the bank to update if there are any changes in your address, contact number, or personal details to comply with KYC requirements.
Provisions Related to Dormant Accounts in Nepal
According to NRB, if there has been no transaction for ten years and the account balance remains zero, banks and financial institutions may close such accounts after publishing a public notice.
In the case of accounts where there has been no transaction for ten years, or where the account holder has not claimed the balance, banks and financial institutions must publish a notice at least once every five years in a national daily newspaper and also display detailed information on the bank’s official website.
If the balance remains unclaimed even after twenty years, or if the account holder cannot be traced, the amount must be deposited into the Banking Development Fund of Nepal Rastra Bank as per prevailing regulations.
Frequently Asked Questions
What is a dormant account in Nepal?
A dormant account is an account that has not been used for a certain period of time and no transactions have taken place within it, such as deposits or withdrawals.
How do I reactivate a dormant account?
To reactivate a dormant account, you will have to visit your bank and submit the required documents and update KYC. After verification, you can use it.
Does reactivating accounts cost any charges?
No, there are no charges in reactivating the account.
