Inactive or Dormant RD Accounts: What Really Happens and Why
While RD accounts do not become dormant in the same way savings accounts do, they can be marked as inactive or discontinued due to missed payments, dormant linked accounts, or outdated KYC. Understanding the reasons and taking timely action ensures smooth deposit operations and uninterrupted maturity benefits.
Recurring Deposits (RDs) are long-term savings products where customers make monthly deposits for a fixed tenure. A common question many depositors have is whether an RD account can become dormant, similar to a savings or current account.
Can an RD Account Become Dormant?
Unlike savings accounts, an RD account usually does not become dormant in the traditional sense because monthly instalments are scheduled and maturity is predetermined. However, if instalments remain unpaid for a specific period or if the linked savings account becomes dormant, the RD may be classified as inactive, discontinued, or flagged for restricted operations depending on the bank’s policy.
When Can an RD Be Treated as Inactive or Discontinued?
An RD account may be treated as inactive in the following situations:
- Multiple monthly instalments are missed
- The linked savings account becomes dormant
- No activity or contact from the customer for a long duration
- KYC is not updated when the bank mandates it
- Regulatory requirements force the bank to restrict operations
Banks do not usually label RDs as “dormant,” but they may stop operations, apply penalties, or mark the RD as discontinued.
What Happens If an RD Becomes Inactive?
If an RD is treated as inactive or discontinued:
- Penalties may be charged for missed instalments
- The RD may stop accepting further deposits
- Maturity amount may be delayed until KYC or account reactivation
- The bank may require the customer to update KYC before settlement
- Interest may reduce depending on the bank’s policy on discontinued RDs
Why Do Banks Monitor Inactivity in RD Accounts?
Banks track RD activity for:
- Regulatory compliance
- Prevention of misuse or fraudulent activity
- Ensuring customer contactability
- Proper handling of maturity payouts
- Identification of accounts that need KYC updates
How to Prevent an RD From Becoming Inactive
- Ensure monthly instalments are paid on time
- Keep the linked savings account active
- Update KYC details whenever required
- Maintain a valid mobile number and email with the bank
- Set up auto-debit or standing instructions for RD payments
How to Reactivate an Inactive or Discontinued RD
Step 1: Visit the Bank Branch
Reactivation usually requires a branch visit to verify your identity and account status.
Step 2: Update KYC If Required
Submit identity and address proofs if the bank demands an updated KYC.
Step 3: Clear Pending Instalments or Penalties
Some banks allow paying overdue instalments; others convert the RD to a reduced-benefit status.
Step 4: Request Account Reactivation
A written application may be required to resume the RD or allow maturity payout.
Step 5: Obtain Confirmation
The bank processes reactivation and provides confirmation via SMS, email, or passbook entry.
FAQs on Can an RD Account Become Dormant
- Can an RD account become dormant like a savings account?
Not exactly. RDs are not categorised as dormant, but they can become inactive or discontinued if instalments remain unpaid or the linked account becomes dormant.
- What happens if I miss several RD instalments?
Banks may charge penalties, convert the RD to a discontinued status, or reduce the interest rate.
- Can my RD continue if my savings account becomes dormant?
No. If the linked savings account becomes dormant, auto-debits fail, which may stop RD payments and affect the RD status.
- Will I still get interest if my RD becomes inactive?
You may get interest, but some banks reduce the interest rate for discontinued RDs based on their policy.
- Can I reactivate an RD online?
Some banks allow partial updates online, but most require a branch visit, especially for KYC reactivation.
- Do I need to update KYC to reactivate an RD?
If the bank requests it, you must update your KYC before reactivation or maturity payout.
- Can an inactive RD be closed before maturity?
Yes. Banks allow premature closure, but penalties or reduced interest may apply.
- Will my RD mature normally if it becomes inactive?
Maturity may be delayed if KYC or account verification is pending, even though the tenure technically ends.
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