Once the bank account is frozen, then the account holder cannot do any transaction with that account. However, in many cases, money can be deposited in it until the account is unfreezed. After the account is frozen, all types of payments are also stopped automatically.
Bank account can be frozen due to many reasons. Sometimes due to some legislative work, sometimes due to the Income Tax Department and sometimes even by court order, bank accounts are frozen. 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 before freezing the account of a customer, a notice is sent to him by the bank. If the account has been frozen for a long period of time for valid reasons, then getting it reopened is a long process.
Due to these reasons also the account freezes
- The bank automatically freezes your account if suspicious transactions start happening in your account – such as a sudden increase in the number of online purchases or purchases made with debit cards abroad. 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 KYC once in three years. If a customer does not do this then his account is frozen. If there is no transaction in your account for 6 months then your account may be frozen.
- The account of a person is frozen even on the instructions of the Income Tax Department. Similarly, the order of SEBI is also followed. In cases of financial fraud or some other types of cases, the courts also order the bank to freeze the bank account of the accused.
What to do when account is frozen
- First of all you should contact your bank branch. Ask the reason for the account getting frozen?
- If the account is frozen due to suspicious transactions or non-completion of KYC then the account will be activated soon.
- If the account is frozen on the orders of Income Tax Department, SEBI or any court, then the bank management cannot do anything before the order comes from there.
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