Yes, forgotten Indian bank accounts usually still go on your FBAR. If you own an Indian account (or can sign on it) and it held any money during the year, it counts. It doesn't matter if it's inoperative, untouched for years, or closed partway through the year.

Let's start with a real-life example, because this comes up all the time.

A client in Austin called us last week, a little panicked. While visiting home, she found an old Canara Bank passbook in her mom's cupboard. The account was in both their names. They'd opened it in 2011 so her mom could deposit rent, and nobody had used it since 2022. Her question was simple: "Is this going to be a problem with the IRS?"

The honest answer? It depends far less on whether the account is being used and much more on what it was worth during the year. The US cares about ownership and value, not about when you last logged in.

Timing matters too. FBARs for calendar year 2025 are due by 15 October 2026 with the automatic extension. Below, we'll walk through how idle and closed Indian accounts fit into FinCEN Form 114, the Indian-side issues hiding underneath most of these cases, and how to fix past years in the right order. If you need the basics first (who files and which accounts count), our FBAR filing guide for NRIs covers that.

The Short Answer in One Paragraph

Here's the whole thing in a nutshell, so you can see where we're heading.

Not using an account doesn't take it off the FBAR. If an Indian account you own or can sign on held any money during the calendar year, its highest value that year goes into the $10,000 total. If you end up filing, you list it. An account closed during the year still belongs in that year's report. Only an account that sat at zero for all twelve months adds nothing to the total. And separately, Schedule B of your Form 1040 asks about foreign accounts with no minimum value at all.

Does a Dormant Indian Account Still Count for the FBAR?

Yes, it does. "I haven't touched it in years" sadly isn't an exemption.

The FBAR really only asks two questions:

1. Do you own, or have signing authority over, an account outside the US?
2. Did all those accounts together go above $10,000 at any point in the year?

Notice that neither question mentions activity. You can own an account you never use, and ownership is what triggers reporting.

Words like "dormant", "inoperative" or "frozen" come from Indian banking rules. They tell the bank how to treat the account internally, like asking for fresh KYC before you can withdraw. They mean nothing under the Bank Secrecy Act, which is the US law behind the FBAR.

So if your bank sends a letter saying your account is inoperative, read it as "please update your KYC." It says nothing about your US filing.

What Happens to a Neglected Account in India?

It helps to know how RBI rules handle an account that's been left alone. Each stage raises slightly different questions on the US side.

Why the Interest Matters More Than the FBAR

Before you even think about the FBAR, look at the interest. In our experience, that's usually the bigger issue with forgotten Indian bank accounts.

An idle NRO savings account, an FD that keeps auto-renewing, or a matured FCNR deposit sitting on the bank's books all keep earning. If you're a US tax resident, that interest is taxable in the year it's credited. It should show up on Schedule B of your Form 1040.

How NRO interest is taxed in India and the US

On NRO interest, the Indian bank deducts TDS at 30% plus surcharge and cess. This now falls under Section 393 of the Income-tax Act, 2025, which replaced Section 195.

Here's the catch:

• Article 11 of the India-US tax treaty generally caps India's tax on interest at 15%.
• You can get the extra back by filing an Indian return, backed by a US Tax Residency Certificate and Form 10F.
• On your US return, the foreign tax credit (Form 1116) is limited to what India was allowed to charge under the treaty. So you can't claim the full 30%-plus.

Our India-US DTAA guide walks through how all this fits together.

Why NRE and FCNR interest slips through

NRE and FCNR interest is tax-free in India. That's exactly why people forget it. The US gives no such break, so an untouched NRE deposit can quietly create taxable US income year after year, with no Indian tax to offset it.

We bring this up first for a practical reason. Whether you reported this interest decides which IRS fix is open to you. Get it wrong, and a simple late FBAR can turn into a much harder conversation.

How to Work Out the $10,000 FBAR Threshold

Now for the math. It's simpler than it looks once you know the rules.

For each foreign account:

1. Find the highest amount it held at any point from 1 January to 31 December.
2. Convert rupees to dollars using the US Treasury reporting rate for 31 December of that year (even if the peak happened in March).
3. Round up to the nearest dollar.
4. Add all the accounts together.

Year-end balances don't matter here. Neither does India's April to March financial year.

Example: three accounts, three easy mistakes

Meera has a Green Card and lives in Texas. Here's what she held in India during 2025. We're using ₹88 to the dollar just to keep the example simple.

Meera is over the line, so she files and reports all three. What makes this example useful is how easy it would've been to talk herself out of each one:

• The joint account. She thought she should count half, since her mom mainly uses it. Nope. Every US-person owner reports the full value. Counting half would've given her $9,300 and the wrong idea that she didn't need to file.
• The matured FCNR. She thought of it as "done" because it matured. But uncollected money is still money the bank holds for her. And since it's a dollar deposit, there's nothing to convert.
• The closed NRE account. It closed in August, but it existed for most of 2025. Its peak before closing counts for this year.

One more thing that surprises people. If money moved from one foreign account into another foreign account before reaching the US, it shows up in both accounts' peaks. The FBAR doesn't cancel out transfers between your own accounts. Overstating the total this way isn't an error. Dropping an account to avoid it would be.

What If You Closed the Account?

It all comes down to the calendar year. If you held the account on any day in 2025, it goes on your 2025 FBAR, valued at its peak up to the closing date. From 2026 on, it disappears.

An account you closed in 2023 has nothing to do with 2025. But it still matters for any earlier year you haven't reported yet.

FBAR vs Form 8938 on closed accounts

FinCEN Form 114 doesn't ask you to flag an account as closed. You just list it with its maximum value like any other.

Form 8938, if you also need to file it, does have a box for accounts closed during the year. Make sure the two forms line up so they don't look like they contradict each other.

Don't rush to close everything

Here's a warning we give everyone who wants to "clean up" before calling us. Closing an account today doesn't fix unfiled years when it was open. The IRS can assess a civil FBAR penalty for up to six years after the original due date.

What closing does do is make the bank harder to deal with when you need old statements later. So collect the statements first, then decide what to close.

Tricky Situations We See All the Time

Real life is messier than the rules, so here are the cases that come up most often.

An account that held nothing all year

If it sat at zero from January to December, it adds nothing to the threshold. But this group is smaller than you'd think, because even a few rupees of interest give the account a positive peak.

If you're filing anyway, we still list zero-balance accounts with a value of zero. FinCEN accepts that, and a complete list is easier to defend than a picky one.

Money already moved to RBI's DEA Fund

Lots of people now find old deposits through RBI's UDGAM portal, which searches unclaimed balances across participating banks. So if the money's already gone to the DEA Fund, is it still a reportable account?

Honestly, neither FinCEN nor the IRS has said. What we do know is that your right to the money survives. You claim it through the original bank, which pays you and gets reimbursed by RBI. The account can even be revived after KYC.

Because of that, our view is to report the deposit at its last known value once you know about it, until it's claimed or closed. The extra line costs you nothing. Leaving out something you knew about is a lot harder to explain later. The cleanest fix? Claim the money and close the account.

An account from a parent who has passed away

Accounts often go quiet after a parent dies, simply because nobody's using them.

• If you were a joint holder, the account is now yours and is reportable at full value.
• If you were only the nominee, you first hold the money for the legal heirs. Once it passes to you as an heir, it becomes reportable.

An inheritance of more than $100,000 in a year from a non-US person also brings in Form 3520. Indian family trusts raise their own questions, covered in our Form 3520-A guide.

When you can't get old statements

Banks usually want updated KYC before they'll release statements for an inoperative account. The good news is that many now offer Video-KYC or let you update at any branch.

If you truly can't get the records, FinCEN allows a reasonable estimate of the maximum value. Write down how you worked it out and keep that note with your records.

How Do You Fix Past Years of Missed FBARs?

The right fix depends mostly on one question: was all the income from these accounts already on your US returns?

The most common mistake

People rush to file late FBARs through the Delinquent route without checking whether those idle accounts earned unreported interest. That route assumes your income reporting was already complete.

If it wasn't, you end up disclosing the accounts without the protection the Streamlined procedures were built to give you. So sort out the income question first.

What the penalties look like now

• For penalties assessed on or after 17 January 2025, the inflation-adjusted cap on a non-willful FBAR penalty is $16,536.
• After the Supreme Court's 2023 decision in Bittner v. United States, that cap applies once per report, not once per account. That's a big relief if you have several small idle accounts.
• Willful violations can cost the greater of roughly $165,000 or half the account balance.

Moved Back to India? The Same Problem Works in Reverse

Lots of NRIs who return to India leave a US checking account open for subscriptions, or just forget about an old savings account. Once you're Resident and Ordinarily Resident (ROR), those US accounts need to go in Schedule FA of your Indian income tax return.

Here's how Schedule FA works:

• Like the FBAR, it uses the calendar year (the one ending 31 December within the relevant Indian financial year).
• It asks for the peak balance, closing balance, and gross amount credited.
• An account closed during that calendar year is still reported, with a closing balance of zero.
• While you're RNOR, you don't need to fill in Schedule FA. That's one more reason your first few years back deserve careful RNOR planning.

Skipping it can lead to a ₹10 lakh penalty under the Black Money Act. Under recent amendments, that penalty doesn't apply if your foreign assets (other than property) stay within ₹20 lakh in total.

The Income Tax Department is also now writing to residents based on information it gets from abroad. If you've received one of these, see our explainer on the Income Tax "Overseas Financial Interests" email.

Four Disclosures Compared: How They Treat Idle or Closed Accounts

Here's everything side by side, so you can see which form wants what.

A Quick Self-Check for Forgotten Indian Bank Accounts

Grab a coffee and go through these for every year you're unsure about. Any "I don't know" answer is the thing to chase first.

1. Have I found everything? Think NRE, NRO, FCNR, regular savings, every FD by its own number, joint accounts with family, and anything you can sign on without owning. Run a UDGAM search and check each bank's unclaimed-deposit page.
2. Can I get into each one? For inoperative accounts, finish KYC so the bank will send statements.
3. What was each account's peak? Look at the full January to December period, including months before any closure.
4. Does the total go over $10,000? Convert at the 31 December Treasury rate, round up, and add.
5. Did the interest make it onto my US return? Compare Indian interest certificates and Form 16A with your Schedule B, and check that the foreign tax credit was capped at the treaty rate.
6. Which fix fits, if any? Decide this before filing anything for a past year.
7. What should I close? Only once you have statements in hand. Keep closure letters and all records for at least five years from each FBAR due date.

Talk to Us Before You File

Most cases involving forgotten Indian bank accounts are pretty straightforward when you handle them in the right order: find the accounts, work out the interest, pick the right route, then file. They only get expensive when that order gets flipped.

At Dinesh Aarjav & Associates, our Chartered Accountants, US CPAs and Enrolled Agents handle both sides. We reactivate and close Indian accounts, reclaim extra TDS, and prepare current and past-year FBARs and returns under the right IRS procedure.

Check out our US Tax Returns for NRIs and Compliances & Disclosures services, or message us on WhatsApp to set up a review.

Disclaimer: This article shares general information based on rules in force in 2026 and isn't advice for any individual case. Penalty limits are adjusted for inflation every year, and the right correction route depends on your specific facts.