What is a Frozen Account?

Learn about bank freeze with Ajay Devgan!

 

 

An account freeze means when the account holder is unable to withdraw money from that account. Ajay Rai’s (played by Ajay Devgan) father is upset with his spendthrift attitude and decides to call the bank manager to freeze his bank account.

Bank Manager decides to freeze Ajay Rai’s account, but Ajay Rai’s fake father (played by Aamir Khan) walks into the bank and starts scolding the bank manager.

When are accounts frozen?

Banks generally freeze accounts in the following situations:

  1. When a creditor seeks judgement against the account holder for an unpaid amount.
  2. There’s suspicious or illegal activity in the account.
  3. If money laundering is suspected.
  4. Government can also request a bank freeze if any loans or taxes are unpaid.
  5. If there seems to be terrorist financing, banks can freeze accounts.
  6. If there are security breaches, bank might resort to freezing accounts.
  7. Any fraudulent activity can lead to freezing of account.

One can still receive deposits in the account but withdrawals and transfers will be stopped in a frozen account. The money that just entered the account will also be frozen, which mean the holder cannot withdraw it.

Closed Vs. Frozen A/c:

Now, the fake father (Aamir Khan) tells the manager, why would I call you to ‘CLOSE’ the account. Closing account is different from freezing the account. If the bank were to close Ajay Rai’s account, bank would pay the balance money that is in the account. One would receive this money either in the form of a cheque or demand draft after all applications and checks are in place. In case of frozen account, balance in the account remains in the bank account but one is not able to use it. In fact, a frozen account cannot be closed.

Dormant Vs. Frozen A/c:

Dormant account is different from frozen account, dormant account is one which has had no financial activity for the past 24 months. Accounts become inactive when there is no activity for 12 months. In order to reactivate the dormant account a written application, Identity and address proof is required by the bank.

Unfreezing Bank Account:

Best known way to unfreeze a frozen account is to erase the judgement against the holder of the account. Once the creditor is paid, bank will unfreeze the account, but if this is not the case and  it has been unjustly been frozen, then you can also approach bank’s customer care to get matters sorted. Last resort would be to approach RBI (Reserve Bank of India) to get help in unfreezing accounts.

Understand with a Youtube Video:

Written by: Gitika Chandra

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