If your bank account is no longer useful, best is to close the account. VIBHA SINGH finds out why.
Deepak Anchan, software consultant, switched his job four times in three years each time the new organisation opened a new salary account for him in different banks. Anchan was shocked when he received letter from a bank stating that he had a deficit of Rs 22000. Talking about the harassment faced. He wrote many letters telling the bank officials it was a zero balance account but he received a reply that as there was no deposit for four months and he would have maintain an average balance of Rs 10,000 as it no more a salaried account.
The issue is that in many banks the zero-balance salary account gets automatically converted into a regular savings account in three to six months and will need the minimum average balance maintenance. The bank starts deducting charges for non maintenance of minimum balance. A senior executive of ICICI bank said, “We normally inform the employers in case the salaried account is discontinued due to non credit of salaries. So an employer should check with the new company if he can continue with the old account to save trouble.”
Many times the bank accounts become dormant because of busy schedule or lethargy. Explaining the situation financial expert point out that, many people have multiple bank accounts due to one or the other reason. But it is best to close these accounts if you are not
using them. Vini Maheshwari, financial planner explains, “The main issue is the unnecessary fees you will have to pay if you are not able to maintain a minimum balance. This affects your relationship with the bank in case if you are looking for new loans or any other services then the banker would reject your application looking into the irregularity in your account. Also when you account is inactive for a long period all services like cheque books, internet banking, change your address or phone number and issues of debit card are not entertained by the bank. Also this would also create problem while filing your income tax as there would be a problem in computing your interest.”
The issue also comes with number of services which are linked with the bank account that includes demat and online trading. Harish Sapra, personal finance consultant, Axis bank says, “A bank account becomes dormant in case of our bank if there are no transactions in the account for more than six months. So all the services associated with the banks are also stopped at the same time. This creates many problems for the accountholders as not able to then do any transaction. When the bank account is inactive most of the correspondence by the bank are stopped.”
There are many public and private sector banks which still have minimum balance requirements. You can avoid the closure of your bank a/c by making small transactions. For example, if you are holding an account with private sector banks, the average minimum balance if the account is held in a metro is Rs 10,000 and for an account held in a rural area is Rs 5,000. Bipin Kothari, chartered accountant and member of the ICAI advises, “Nowadays, a lot of banks provide a minimum balance, zero charges account, where the charges for cheque books, debit card, online transfers are zero, if a certain amount of balance is maintained in the account. This feature is fast picking up as the various charges levied in the bank accounts can be avoided.”
Experts are of the view that should consolidate or eliminate old accounts as all bank accounts are PAN based. If you can open one less account, do it. Kothari is of the view that, “Prepare a budget. Manage the funds in the account in a manner to clear all monthly payments timely. Keep track of all ECS direct debits to your account. Avoid payment returns as it affects CIBIL score and also pay bank charges on times. Transfer surplus funds to deposit accounts to earn more by way of interest income. Keep your postal address, mobile number and your email address updated on all your bank accounts.” Also the fewer the accounts you have less tension of fraudsters.
