Social media users were amused when a particular bank released a witty, All Souls’ Day-themed reminder concerning its clients’ dormant accounts.
Land Bank of the Philippines in their Facebook and Twitter pages reminded its clients to reactivate accounts that have reached their dormant state. According to them, November is a good time to settle the obligation.
Their announcement was met with warm responses from clients and non-clients alike.
According to the government-owned bank, a dormant account would be fully inactive once it does not detect an activity for a certain period of time.
What is a dormant account?
Any type of bank account is considered dormant when there are no transactions initiated by a depositor for a while. Once it does not detect any kind of activity, the account is rendered dormant.
It is the last stage before account deactivation when the money is turned over to the Bangko Sentral ng Pilipinas after ten years of inactivity following the account’s dormancy.
Land Bank has two types of accounts that could be considered dormant: a savings and a current account.
A savings account is considered dormant when it does not detect any activity for 24 months and when its money falls under the required average daily balance.
The average daily balance refers to the account’s total balance in a month divided by the number of days within the month.
A current account, on the other hand, is considered dormant when it does not detect any activity for 12 months and when its money falls under the required average daily balance.
The need for reminders
Maintaining a dormant account is costly for banks because additional measures are being made to protect the client, such as requiring extra approvals and maintaining a special security for signature cards.
These types of accounts are subjected to “more stringent controls, custodianship and reporting requirements,” notes Jun de Zuñiga.
He is the general counsel and a member of the monetary board in the Bangko Sentral ng Pilipinas.
De Zuñiga explained, “This is to prevent the accounts from being taken advantage of through spurious or forged claims.”
“Because of the added administrative handling, dormant accounts can be subject to dormancy fees in accordance with regulations issued by the Bangko Sentral. However, before such fees can be collected, notice must first be given by the bank to the depositor,” he continued.
Dormancy fees, in the case of Land Bank, amounts to P30 per month. It is collected once the dormant account reaches its fifth year of inactivity. However, if the client fails to reactivate the account, the bank would be obliged to turn the money over to the government.
