HOW many accounts do you have and how many do you actually use? If you don't withdraw money or carry out any transaction from your account through the bank's ATM, branch or website, for a period of 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'. If your account is being classified as 'inactive', you cannot operate it through the ATM/phone or internet banking. The reason is that bank systems do not identify inactive accounts. Different banks follow different criteria to define such accounts. For HDFC Bank, it's out 12 months, ICICI Bank —15 months while foreign banks like Citibank, HSBC and Standard Chartered Bank classify an account as inoperative if no transactions have taken place for two years.
According to the IBA model policy on bank deposits, 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 all the relevant charges applicable on such dormant / inoperative accounts before they freeze their accounts. Most bigwigs such as SBI, HDFC Bank or ICICI Bank do not charge any penalty. Barclays Bank charges a penalty of 250 excluding service tax. However, you can't use the account or any banking service linked to the account. If the account has been 'inactive' for more than a year, you have to give a letter for activation of the account signed by each of the account holders. You are also required to submit a photo identity such as a passport, driving license, etc. for 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 you carry out transactions once in while in such unused bank accounts. This saves you from the trouble of reactivating the account and the costs attached (if any). Withdraw cash at a branch or an ATM, make a cheque payment, and transfer funds through either of the banking channels at least once a year. It will save you the effort of filling forms and visiting the branch to reactivate the account.
