How to close unwanted bank accounts2 min read . Updated: 30 Oct 2019, 06:34 PM IST
- Having too many bank accounts may not be a great idea as you are required to maintain an average quarterly balance
- Note that most banks levy an account closure fee if you close it within a year from opening
You may end up with multiple accounts for various reasons—switching jobs is the most common. Having too many bank accounts may not be a great idea as you are required to maintain an average quarterly balance. For example, customers having a regular savings bank with the State Bank of India (SBI) in metro and urban areas are required to maintain a minimum average balance of ₹3,000, in semi-urban branches ₹2,000, and in rural branches ₹1,000. Not maintaining the balance may attract penalty and even impact your credit score. Let’s understand the process of closing a bank account.
De-link the account
If the account you want to close is linked to any of the payments platforms or service apps like Paytm Uber or Swiggy, or any investment portals like FundsIndia or Scripbox, you will need to first de-link it. UPI payments, in particular, operate based on the bank account linked to your phone number; so do remember to de-link it. Do provide an alternate bank account number so that the standing instructions for your EMIs or investments are not disturbed. Some platforms may ask you to fill a de-linking form.
Fill the closure form
All banks offer an account closure form, which you can procure from the bank’s branch or website. If it’s a joint account, then all account holders will have to give their consent by signing the closure form. You may also be asked to fill a separate form mentioning the account number to which the balance funds need to be transferred.
Typically, banks ask you to return the unused cheque books, debit and credit cards, passbook and any other documents issued by the bank. You will have to surrender all these with the account closure form. In some cases, the bank could also ask you to destroy these documents by yourself.
Note that most banks levy an account closure fee if you close it within a year from opening. SBI, for example, does not levy a closing fee if you close the account within 14 days of opening it. From day 15 up to a year, the bank charges ₹500 plus GST. However, it’s free beyond the one-year mark. Though regulated by the Reserve Bank of India, banks are free to levy any closing charges as per their financial situation. So some banks may charge a slightly higher account closure fee compared to others while some might completely waive it off.
Once all this is done, the bank will check for any pending charges associated with the account. Ask the bank for an acknowledgement stating closure of the account. It is advisable to preserve the last account statement, which indicates the termination. Keep these things in mind and don’t let unwanted bank accounts lie idle as they serve no good to your financial life.