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Know Why Banks Freeze Your Account? Common Reasons and Steps to Unfreeze Bank Account?
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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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Bank savings accounts are a crucial part of your financial management. You may open a new bank account to park your surplus funds, which you can access in times of financial emergencies or monetary shortfalls. Note that the balance you deposit allows you to earn bank interest on savings accounts. However, if for any reason your bank account is frozen, then it may be a big problem for you. A frozen bank account stops you from making any transactions through the online mode. Also, such accounts do not allow you to use your bank cheques.
Here Are Some Reasons Why Your Bank May Freeze Your Account.
1. Failure to Repay Your Loan Dues on Time
If you fail to repay your loan dues despite several reminders, then your bank may freeze your bank account. For instance, when you owe a huge amount of funds to the bank with whom you also hold a savings account, then the account may be blocked until you repay the loan outstanding in full.
2. Suspicious Activity
This is another reason for your account to be frozen. For instance, if your bank notices a massive amount being transacted from any unrelated party, then your bank may freeze your bank account until you give approval. Note that banks act this way to secure your account against suspicious activities. Also, in case you witness any unusual transaction, you can request your bank to freeze your account.
3. Inactivity
If there is no activity in your bank account for over two years, which includes failure to maintain the savings account minimum balance, then your bank may treat your account as dormant or inoperative and freeze it.
4. NonPayment of Taxes
At times, you may default on paying your taxes and fines that you owe to the government. In such a scenario, the government may order your bank to freeze your bank account.
5. Demise of the Account Holder
On the demise of the bank account holder, the account may be frozen if the holder has no direct inheritor.
How Can You Unfreeze Your Bank Account?
There is no specified period for which your bank has to keep your savings account frozen. Thus, banks may be ready to activate or unfreeze your account if you follow a prescribed process set by them and meet the conditions as mandated by the bank.
For instance, if your bank account was frozen owing to loan repayment default, then after making the repayment you may request for activation of your bank account. In contrast, suppose your bank froze your account because of any suspicious activity, then they may unfreeze it once you confirm the authenticity of the transaction. However, in the case your bank account is frozen because of the government order, then the bank may not unfreeze until the government says so.
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