Some banks charge during saving bank account closure. Read on to know the reason behind the charges and the process for closing an account.
Banks operate as per the regulations prescribed by the Reserve Bank of India ensuring that the common man gets banking facilities in an easy and swift manner. Additionally, banks also need to maintain a positive profit margin in their books as independent financial institutions. It is for this reason that banks charge consumers various fees on the service it offers to both its regular and corporate users.
Recently, banks increased their minimum balance requirements (MAB) in a bid to control their losses. Public sector banks, as well as private banks, levy a minimum monthly balance or an average quarterly balance requirement. While non-maintenance of MAB can lead to penalties and extra charges, not many are aware that some charges are also applicable in the event of the closing of a Savings Bank Account.
RBI Regulations And Savings Bank account Closure
While the banking sector is regulated by the Reserve Bank of India, there are no fixed guidelines for account closure charges. Banks are free to levy any charges on account closure as per their financial position. This is why some banks may charge a slightly higher account closure fee compared to others while some banks may choose to waive off any such savings bank account closure charges.
Why Do Banks Charge For Account Closing
Some banks charge during account closure to recover the cost of various services incurred during opening an account. This could include the cost for issuance of a chequebook, Debit Cards etc.
What You Need To Know About The Closure Process
Know The Account Closure Charges: While opening a saving bank account, it is important that you learn about all the related processes and charges. Various banks have different charges applicable for account closure. State Bank of India, for example, has recently waived off account closure charges for accounts older than 1 year. Additionally, SBI does not levy any charges for accounts closed within 14 days of opening due to any reason. However, if an account is closed between 15 days to 1 year, then a charge of Rs. 500 plus GST is applicable. By knowing the charges applicable, account holders having multiple bank accounts can choose the account closure for banks levying zero or lowest account closure charges.
State Bank of India, for example, has recently waived off account closure charges for accounts older than 1 year. Additionally, SBI does not levy any charges for accounts closed within 14 days of opening due to any reason. However, if an account is closed between 15 days to 1 year, then a charge of Rs. 500 plus GST is applicable. By knowing the charges applicable, account holders having multiple bank accounts can choose the account closure for banks levying zero or lowest account closure charges.
By knowing the charges applicable, account holders having multiple bank accounts can choose the account closure for banks levying zero or lowest account closure charges.
Close Multiple Bank Accounts: Many individuals have multiple bank accounts, including the ones they no longer operate. Non-operation or non-maintenance of adequate funds can increase MAB charges, which may impact an individuals’ Credit Score in the long run.
Parking funds in multiple bank accounts attract a meagre interest rate of 4% which may not always be able to beat the inflation rate. By closing additional savings bank accounts, the funds can be invested in various investment instruments leading to possibly higher returns than savings bank accounts.
Steps Involved In Closing Savings Bank Account
Step 1: Transfer the funds out to the other account or withdraw the funds.
Step 2: Visit the bank branch and apply for account closure using the account closure form. The form can also be filled online as per the bank concerned.
Step 3: The bank will check for any pending charges associated with the account. Bank will seek associated account closure charges if applicable. If no charges are pending, the bank will either seek submission of associated Debit Card and cheque book or ask the account holder to destroy the same before approving closure of the savings bank account.
BankBazaar is a leading online marketplace in India that helps consumers compare and apply for Credit Cards, Personal Loans, Home Loans, Car Loans and insurance.