Is Your Forgotten Bank Account A Fraud Risk? What SBI's Dormant Account Crackdown Means for You

The digitisation of the banking ecosystem has made the process of opening bank accounts easier and more accessible. However, as the ease of opening bank accounts increases, there is also a rise in accounts turning dormant. Often depositors end up forgetting about their old savings accounts, especially when they switch jobs or relocate to different cities for work.

Typically, ignoring a zero-balance account seems like a harmless thing. However, it can pose a significant security threat. Dormant accounts become security threats because their established history allows unauthorised transactions to bypass automated fraud detection filters, and attackers exploit the legitimate owner’s lack of monitoring to hijack these accounts, using them to hide and route illicit funds.

Keeping in mind the risks associated with dormant bank accounts, the State Bank of India  has announced via a release that it has initiated a major cleanup drive targeting these inactive accounts.

SBI’s Inoperative Bank Account Policy

SBI is taking strict action against regular savings bank accounts that have not recorded any customer-induced transactions recently. To clarify who falls under the regulatory sweep, the bank issued a specific timeframe for inactivity and has mentioned that accounts with no transactions for the past two years will be considered inactive.

"This notice is for those Savings Bank (Regular) Account holders, whose accounts have become 'Inoperative' as they did not transact their accounts in the past two years," SBI said.

The lender issued a strict ultimatum for accounts lacking funds and updated documentation. Additionally, accounts having a zero or nil balance for more than one year will also be closed after one month of SBI’s notice.

"Such Inoperative Accounts having nil balances for more than 1 year will be closed after one month of this notice without any further intimation if their KYC is not updated within a month's time," the State Bank of India said.

Notably, this account closure will happen automatically and without any further direct communication to the account holder.

The Underlying Fraud Risks

Dormant accounts are prime targets for unauthorised transactions and identity theft. Fraudsters often try to use neglected accounts to route illicit money or treat dormant accounts as ‘mule accounts’ since the actual account holder is no longer monitoring the statements or SMS alerts.

By removing accounts with zero balances that have been abandoned for extended periods, the bank is attempting to reduce the risk of these accounts being repurposed for financial crimes. This proactive measure ultimately protects the broader retail finance ecosystem from money laundering and digital fraud.

How to Reactivate and Prevent Account Deletion

Customers who wish to keep their neglected savings accounts active have a brief window to act. For customers looking to salvage their accounts, multiple ways are available for reactivation.

"They are hereby requested to approach any branch of SBI with their KYC documents, or they may use digital channels viz. Internet Banking/YONO App/ATM/WhatsApp Banking, etc., for updating their KYC," the State Bank of India said.

Completing this step will help depositors reactivate the account and protect it from being permanently closed.