Carrying out at least one transaction every year can stop your account from being frozen
If you have not operated your bank account for more than a year, be prepared for tiresome processes ahead because your bank would have frozen your account. If you have not withdrawn money or carried out any transaction from your account through the bank's ATM, branch or website for more than a year, the bank terms your account as inactive. If the account is kept unused for almost two years, it is classified as 'dormant'. An 'inactive' account cannot be operated through ATM/phone or internet banking. This is because bank systems do not identify inactive accounts.
There is no standardisation among banks regarding the time period after which the account slips into a dormant or inactive status. Different banks have set different criteria and the time period may vary from 12-24 months. According to the Indian Banking Association (IBA), banks have the right to transfer such unused accounts to a separate dormant / inoperative account status. But the bank has to inform the depositor of the charges applicable on such dormant / inoperative accounts before they freeze their accounts. Some banks charge penalty for such accounts.
If you want to activate your dormant account, you have to give a letter of activation signed by each of the account holders. You are also required to submit a photo identity (a passport, driving license) of each account holder. All account holders (including joint account holders) have to visit the bank in person. If you hold an account for some share dividends or for some investment reasons, ensure that you carry out transactions once in a while. You can keep the account active by walking into the branch for a withdrawal transaction using a cheque. You can also use internet banking ID to instruct the bank to pass debit and credit entries into your account.
The bank has to inform you three months in advance before it freezes your account. It also has to inform the depositor of all the relevant charges applicable on such dormant/inoperative accounts. Before freezing the accounts, the banks have to inform the customer. Banking codes clarify that the bank has to impart relevant information at the time of opening the account.
It is advisable to withdraw cash from the branch or an ATM, make a cheque payment, and transfer funds through either of the banking channels at least once a year. This saves you from the trouble of reactivating the account and the costs attached (if any). System generated debits (default charges or debit interest) as withdrawal don't qualify as a transaction.
