Multiple bank accounts? Can be financial burden

Mohit Saxena of Moradabad has changed six jobs in the last 12 years. His new salary accounts were opened with different financial institutions. So, he has multiple bank accounts. Recently, while filing the ITR, when the CA asked for the statement of all his bank accounts, Mohit was stunned. Due to lack of minimum balance in his accounts, he has lost a lot of money so far.

It’s not just Mohit’s story. When people frequently change jobs  and shift from one city to another, they have  many bank accounts running against their name.  If you are running more bank accounts than it is necessary, then, these should be closed immediately, otherwise it will cost you heavily.

Usually, if the salary is not received continuously for three months, the bank converts the salary account into savings account. The salary accounts that Mohit had opened in previous institutions were converted into savings accounts. Now, various types of service charges are being levied on these bank accounts. Also,  penalty is levied on quarterly basis for not keeping a minimum balance in the savings account. Even if there is no money  in the account, a fine will be imposed anyway.

For example, if you have four bank accounts, then the biggest problem is to maintain a minimum balance in these accounts. If the minimum balance maintenance limit in each bank is 10,000 rupees, then, your 40,000 rupees will be stuck just for maintaining  minimum balance. If you do not maintain this balance, then you will have to pay a heavy penalty. Since the charges related to minimum balance have increased drastically. In lieu of this, banks can charge up to 750 rupees on a quarterly basis. It attracts 18 per cent GST also. This means, you may have to pay a penalty of up to  3,540 rupees for not maintaining money in each  of your accounts. Many banks continue to impose penalties even when there is no money left in the account. It may have to be paid anytime in the future.

After opening an account, you are issued a debit card. In lieu of this, you are charged from 100 to 200 rupees annually. GST is also levied over and above this. If you have accounts in four different banks, then, you will continue to pay the  charges regularly for each of these accounts. If you do not have money in your account, then, the bank can recover this amount with interest. Nowadays, almost all banks are charging for SMS. Some banks are also charging for using net banking and mobile banking. Banks are also levying fees on  transactions made through cheques. Banks are also charging for using ATM beyond the prescribed limit.

While filing income tax returns, the taxpayer has to provide account number of all the banks, IFSC codes and details of interest income earned in that financial year. Having more bank accounts can also cause problems in filing ITR. It is very important to show the balance lying in various bank accounts and the amount of interest received. For this,  you have to get a bank statement from all these banks. If you haven’t paid your dues, then, you may face problems in getting the bank statements.

Banking expert and former banker KB Singh says that to avoid this problem, before opening a new account, figure out, whether your previous bank accounts are required or not. There is no sense in having multiple bank accounts. Nowadays, bank accounts that have fewer transactions are more likely to be misused. Similarly, hackers also keep an eye on accounts with higher amount of deposits.

KB Singh says that the accounts that you had opened under compulsion and are not required anymore, should be closed  immediately. Such accounts are mostly opened when you change your job frequently. This is because every company has a separate bank account. In such a situation, you should stop using previous accounts. These should be shut down immediately. In fact, banks recover fine using software. Even if there is zero balance, all kinds of penalties will continue to be levied. So, multiple bank accounts should be closed immediately.