Once the bank account freezes, the account holder cannot do any transaction with that account. However, in many cases money can be deposited in the account till it becomes unfreeze. After the account freezes, all types of payments from it also stop automatically.
Bank account can freeze due to many reasons. Sometimes due to some legislative work, sometimes even the tax department freezes, sometimes even by court order, the bank accounts freeze.
In India, Reserve Bank of India, Income Tax Department, Courts and Securities Exchange Board of India (SEBI) have the authority to freeze bank accounts.
Bank sends first notice
Usually, a customer is sent a notice before the bank freezes its account. If the account has been frozen for a long time for valid reasons, then opening it again is a long task.
Due to these reasons, the account freezes
- If a suspicious transaction starts happening in your account – such as sudden increase in online purchases or shopping abroad with a debit card – the bank automatically freezes your account on its behalf. The bank understands that the account of the customer concerned has either been hacked or the debit card has been stolen.
- The Reserve Bank has a provision that the account holder will have to update the KYC once in three years. If a customer does not do so, then his account is fridgeed. If there is no transaction in your account for 6 months, then your account can get frozen.
- On the instructions of the Income Tax Department, a person’s account is frozen. Similarly, SEBI order is also followed. In cases of financial fraud or some other type of courts, the courts also order the bank to fridge the bank account of the accused.
What to do when the account freezes
- First of all, contact your bank branch. Ask the reason for account fridge?
- If the account freezes due to suspicious transaction or KYC is not completed, the account will be started soon.
- If the account freezes on the order of the Income Tax Department, SEBI or any court, then the bank management cannot do anything before the order comes from there.
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