The bank account can get frozen due to several reasons. It can either be due to a suspected fraudulent activity from the bank account or due to a decree from the court, unpaid private loans, tax dues, money laundering, un-paid money to an individual or organization, or use of funds for illegal activities and so on.
Once the account is frozen, the account holder cannot make withdrawals but will be allowed to deposit money into their account until the account is unfrozen.
Freezing of account refers that the account holder will not be able to carry out any of the financial transactions with their bank account until they receive further notice from the bank. All kinds of payments and transactions will come to a standstill.
In India, the Reserve Bank of India, Income Tax authorities, Courts, Securities Exchange Board of India do have the authorization to freeze the bank accounts.
Most of the banks do notify the account holders before freezing their account by serving them with a notice. If the account is frozen for legitimate reasons getting it to unfreeze could be a long and tedious process.
What should the account holder do when their bank account is frozen?
Suspected Fraudulent Transactions
Here, different rules will be applicable based on the scenario as to why the bank account got frozen. In the case of suspected fraudulent transactions, the account holder can directly resolve the conflict by visiting the bank branch or by mailing to them or by dialling the customer care services.
Sometimes, unusual large purchases have the chances of being flagged by the bank. For purchases made abroad using the debit or credit card without informing the bank authorities, the bank may consider that the card got stolen. Hence possibility is there that the transactions will be flagged to protect your account.
In such a scenario, the account holder should contact the bank officials and prove your identity to resolve the issue.
If in case, the account holder is bankrupt and you are informed about the court judgement, then you can file for bankruptcy to prevent the creditors from taking away money from your bank account. Filing for bankruptcy will halt the collection activities due to the automatic stay. But it will not unfreeze your bank account which is frozen.
One should provide the proof of bankruptcy filing to the bank official who is in charge of freezing the bank account through a court order.