Dormant Accounts

In a bank, like fixed deposit accounts, savings accounts and current accounts, there is another account called ‘Dormant Account'.

About Dormant Account

1. It's a savings account showing no activity for some specified period.
2. Dormant Accounts are those accounts which are without any transactions for a long time.
3. In general, a low-balance savings account which has shown no activity (deposits and/or withdrawals) over a long period, other than posting of the interest and/or service charges.

Reasons for becoming a Dormant Account

There may be several reasons for an account becoming a Dormant Account. The reasons may be as follows;

1. The depositor might have moved from one place to another without notifying the banker,
2. He may have misplaced his pass book and cheque book,
3. He may have forgotten about the existence of an account with a particular bank, or
4. The depositor might have died without bank's knowledge.

Controlling the Dormant Account

No such controls are available in case of dormant accounts. In the absence of customer's checks, the dormant accounts can easily be manipulated by cheats.

One method of controlling the dormant accounts is to transfer all of them into one ledger name ‘Dormant Account Ledger'. This ledger should list all the depositors (having dormant accounts with the amount shown against each account).

The signature cards for dormant accounts should also be removed from the active file and should be placed in a locker under dual control. The card reference of such transfers should be kept in the active file. The card should show the name of each depositor and the date on which the account was transferred to dormant account ledger.

Transfer into active account

If a depositor of a dormant account wants, can operate the account as active account. But the entry must be initialed by a responsible official before the account is permitted to be operated upon. The officer concerned should also initial the control sheet when such entries are made.

Extra Knowledge |

Difference between Inactive Account and Dormant Account

Inactive Account means an account had not been in use for a long time and not going to be used in the future. Dormant Accounts are those which are presently not in use but it is likely that it may be used in the near future.

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Article Source: http://www.articlesbase.com/ banking-articles/dormant-accounts-3578013.html

Md. Kamrul Islam (Payal)

Chittagong, Bangladesh