Freezing of bank account means that you cannot do transactions from your account. However, you can get deposits in freeze account. Let us know about it in detail.
There can be many reasons for account freeze. Such as suspicious activity in the account, use of account for money laundering or terror funding, KYC not being updated, no transactions for a long time, etc. In such a situation, the question arises whether your bank account can be frozen without informing you?
Can banks freeze accounts without informing?
Generally, the terms and conditions of a bank allow it to freeze an account. If banks feel that the transactions in the account are suspicious then they can freeze the account.
In many cases they send a notice to the account holder before freezing the account and in many cases the account can be frozen without even informing.
The Reserve Bank of India has not issued any specific instructions regarding this, but it is mentioned in the Master Direction of Know Your Customer (KYC) amended in 2020. There is a right to freeze the account even in cases like terror funding and money laundering.
When can banks freeze accounts?
- To follow the court order.
- When you have been declared bankrupt.
- When there is not enough money in your account.
- To protect the account from any fraud.
- Failure to have KYC as per RBI guidelines.
- Being linked to money laundering and terror funding.
- The account can also be frozen on the instructions of the Income Tax Department.
- Similarly, the account is frozen on the orders of SEBI also.
What to do if account is frozen?
If you feel that your account has been frozen without any reason, then first contact the bank branch and ask them the reason for freezing the account.
If the account is frozen due to suspicious transactions or non-completion of KYC, it will be activated immediately. But if the account has been frozen on the orders of the Income Tax Department, SEBI or the court, then the bank management cannot do anything before the order comes from there.