Consequences of dormant NRI bank account: why should you avoid it and how to reactivate

When it comes to banking, a Non-Resident Indian (NRI) must follow various rules and regulations, predominantly under the Foreign Exchange Management Act (FEMA) and the RBI. To comply with these rules and regulations, an NRI or a Person of Indian Origin (PIO) must open an NRI bank account in India.

If you are an NRI or a PIO, you must know the consequences of a dormant NRI bank account and how to activate a dormant account. 

Consequences of dormant NRI bank account

You may face issues with your non-resident account when it turns inactive. However, problems compound when the account becomes dormant. Consequences include:

  • Chequebooks and other deliverables will not be issued against a dormant account.
  • Debit cards will not be renewed.
  • Changes in correspondence information like address, phone, and email ID will not be possible.
  • Transactions will not be possible through ATMs, internet banking and phone banking.
  • Regular account-related charges may continue to be levied against the account.
  • While the account will remain dormant for your use, there is always a risk of the account being misused for fraudulent purposes
  • When you finally decide to use the account, you will have difficulty accessing it 

A dormant NRI bank account can be of little or no practical use. Therefore, if and when you discover that your account has become dormant, you must find out how to activate it.

Steps to activate a dormant NRI bank account

Let us find out how to activate a dormant account without further ado. Do note that the precise steps to reactivate dormant accounts may differ from one bank to another.

  • Typically, a dormant account can be reactivated physically by submitting a dormant account activation request. It could be called a dormancy removal request or an account activation request, 
  • A request for account reactivation can be sent to the bank via email from the customer’s registered email ID to the bank’s official email ID of the bank while providing all your account-related information. You will be required to submit your KYC details for activation of the dormant account along with a customer-induced transaction from the account.
  • Customer care phone numbers of your bank can also be used to talk to a representative who can guide you on the reactivation of your dormant account. 
  • Some banks may ask for a token mandate to the branch of Rs 1 debiting and crediting your NRI bank account.
  • Also, check with your bank for standardised forms, if any, on how to reactivate dormant accounts.

How to avoid NRI bank account dormancy

To understand how to keep an account active, you must first understand what is a dormant account. 

An account is inactive if there are no customer-induced transactions for over 12 months. If the account remains inactive for another 12 months, it is considered as dormant. Being away from the homeland, you may forget you haven’t used your non-resident account for some time. Therefore, a dormant NRI bank account is a common problem and possibility for non-residents. 

Rather than finding out how to activate a dormant account at the eleventh hour, you should use your accounts at least once in a while. You should also know how to activate a dormant account so that you know how to reactivate it.

More about NRI banking

If you are an NRI or PIO or will become one soon, here is the basic information about NRI banking in India. Starting with – what is an NRI bank account? 

An NRI bank account is a bank account in India authorised by the Reserve Bank of India. It can be opened, used and maintained by NRIs and PIOs. 

Based on the financial requirement of a non-resident, three types of NRI bank accounts are offered by banks:

  • Non-Resident External (NRE) account – It is a rupee-denominated account in the form of savings, current, fixed deposit or recurring deposit. 
  • Non-Resident Ordinary (NRO) account – It is used by NRIs to deposit money that they continue to earn in India and their overseas income. 
  • Foreign Currency Non-Resident (FCNR) account – This account is opened in international currencies and can be held as term deposits for a tenure ranging from 1-5 years.

Keeping an active presence

Now that you know how to activate a dormant account, it is also important to avoid the situation in the first place. You should keep the account updated with changes in your personal information like phone number and correspondence address. You should also maintain regular transactions in these accounts. 

IDFC FIRST Bank NRI Banking offers you the opportunity to enjoy a premium banking experience in India while enabling you to fulfil all your investment goals there. You can select and open the NRI bank account of your choice with IDFC FIRST Bank today!

(The views expressed by the author in the article are personal and do not reflect those of Connected to India.)