What does an inoperative bank account entail?

If you have multiple bank accounts, it is quite possible that one of these accounts might have become ‘inoperative’ or ‘dormant’ as you have not transacted in the account for a long time. An inoperative bank account is one which has not been operated continuously for a period of two years or more. It must be understood here that an inoperative account is different from a frozen account. A bank account is frozen by a bank for various reasons, but a bank account becomes inoperative only due to the failure of the account holder to operate it.

The bank usually sends intimation to the accountholder’s residential address requesting the account holder to transact in the account before classifying the account as ‘inoperative’. If the account holder does not respond to the correspondence and fails to carry out any transaction in the account, the bank will go ahead and declare the account as ‘inoperative. Once the account is classified as ‘inoperative’, the bank may discontinue facilities such as withdrawal through ATM, internet banking, phone banking, mobile banking, issue of new chequebook and other services for the inoperative account. The bank can levy charges such as debit card charges and also pay interest on the balance amount in the inoperative account. However, the bank cannot levy any charge for not maintaining the requisite minimum balance in the inoperative account.

The inoperative account can be made operative by submitting an application to the bank stating your intention to operate the account. The bank may require you to complete the KYC formalities once again, and once these are completed, the bank will activate the account within 24 hours. You can make the account operative by simply depositing cash or cheque into the account or by withdrawing money through withdrawal slip or by cheque or from the bank’s ATM. One can also start operating the account by transacting through net/mobile banking (online purchase or payments of utility bills) or by online transfer of funds from or to another account through NEFT.The bank does not levy any charge for activating an inoperative account.