Bank Account Frozen? Here’s How to Unfreeze It Quickly
5 min read | about 2 months ago
Bank Account Freeze: What You Can Do About It
If your bank account has been frozen, it’s a serious situation that you need to tackle immediately. A bank account freeze means the temporary restriction/suspension of bank account access for a customer. What does this entail? You will not be able to withdraw or transfer any money, while all scheduled payments will also be paused accordingly. Banks sometimes impose these restrictions due to suspicions of fraudulent activity, any ongoing legal action, or even at the request of the account holder in some extreme scenarios.
When the account stays frozen, you can still view the balance, although no banking activities can be carried out until the bank lifts these restrictions. So, how do you get out of the situation? Here’s looking at some of the available solutions below.
Rules for Frozen Accounts at Banks
The account freezing rules may vary across banks, depending on their policies. However, a few standard reasons include the following.
Long Overdue Payments
If you have not settled your pending loan payments despite several efforts and reminders by the bank, then your account may be frozen. This happens if you have a major debt pending with the same bank where you have a savings account as well. In this case, the account will stay frozen until you repay the entire outstanding loan amount.
Suspicions of Fraud
In case there is any suspected activity that the bank detects, including unusual patterns of spending or unauthorized transactions, then the account may be frozen for investigating the same.
Legal Action/Orders
Court or legal judgments against the holder of the account may sometimes lead to it being frozen by the bank.
Non-Verification of Identity
If the bank cannot verify the KYC details or suspects any theft of identity, then it may freeze the account until proper verification is done.
Non-Payment of Taxes
In case you have failed to pay taxes and subsequent fines, then the Government may issue an order to the bank for freezing your account.
Unlawful Activity
An account freeze may sometimes result from issues regarding compliance with Government/regulatory guidelines like anti-money laundering, sanctions, etc.
Inactivity
Suppose you’ve left the account completely dormant for more than two years without even maintaining the minimum balance. The bank may freeze the account in such scenarios.
Account Holder’s Demise
If the account holder passes away without any direct heir/inheritor, the account may be frozen by the bank accordingly.
Now that you have an idea of the reasons behind frozen accounts, let us look at the ways to address the situation.
How to Unfreeze Your Bank Account
In case your account has been frozen by the bank, these are some things that you can do about it.
Reach Out to the Bank Immediately
Contact your bank as soon as you can to know the reason for freezing the account and the steps you have to follow for restoring it.
Tackle the Issue Head-On
Once you find out the real issue, tackle it straight away without delays. If it’s a KYC verification issue, get it done afresh with the bank to unfreeze your account. If it is due to any loan default, repay the pending amount swiftly and ask for the reactivation of the account. If it is due to suspected fraudulent activities or legal orders, cooperate with the investigation of the bank and other authorities.
Get Legal Advice
In case you feel that the account freeze is not justified or face issues in resolving the situation, consider taking proper legal guidance. This will give you an idea of the rights and options that you have.
Conclusion
In case your account is frozen by the bank, you should take a pro-active stance on the issue. Reach out to your bank immediately, find out the issue, and work out solutions in cooperation with the authorities. The faster you address the problem, the sooner it will be solved. There is no specific duration for which the bank has to keep accounts frozen. It may be ready to unfreeze and reactivate your account once you follow the process laid down for solving the issue or meeting certain mandated conditions. Knowing about these aspects is crucial, since we often face such situations without even understanding why they happened in the first place.
On the flipside, if you are looking to open a savings bank account with a reliable banking institution, Unity Small Finance Bank is a good option. It offers attractive interest rates between 6-7.5% per annum along with convenient multi-channel banking access.
About Unity Small Finance Bank
Unity Small Finance Bank is committed to making banking simpler and more accessible for everyone. Our services include Savings Account, NRI account, Current Account, Fixed Deposits, and Personal Loans offering flexible tenures and attractive interest rates. We also offer financing options like MSME Loans and Microfinance to support businesses and underserved communities. Learn more about Unity Small Finance Bank here.
