Closing your bank account? Do this first

In the last 3 years alone, savings account holders have paid over Rs 9,721 crore in the form of penalties for not holding the minimum balance in their savings accounts to both public and private sector banks.

Banks also charge additional fees, especially in the form of non-maintenance fees. According to the Minister of State for Finance & Corporate Affairs, savings account holders have paid around Rs 9,721 crore to public and private banks in the form of penalties for not maintaining the minimum balance in their savings accounts in the last 3 years alone.

This money collected by levying fees for the non-maintenance of the minimum balance in the savings bank account comprises 18 public sector banks (PSBs) and four major private sector banks.

If you want to close your account, but you will not be able to close your bank account if such charges have been charged on your account. Note that banks will not allow you to close your own account until you clear the charges on your account that they have charged. In order to be able to close their account, customers will have to pay those charges.

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Therefore, experts suggest that before closing the account, one should try to maintain one's minimum average balance. This will allow them to avoid additional charges.

However, if you want to close your account within one year of opening it, the bank will charge a closing fee. This fee can also be prevented if you close your bank account within 14 days of account opening.

Nevertheless, if you apply after 14 days but before a year for the closing of the account, you will have to pay the termination fees. Nevertheless, closing an account after one year does not incur closing fees.

Notice that banks are not only paying their customers for the non-maintenance of the minimum average balance, other costs are also charged. Such charges include cash transactions, digital transactions, withdrawals from ATM above free-limit limits, charges for SMS warnings, etc.

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Banks claim that the charging of different charges on customer services and activities helps them recover the costs they incur to run their day-to-day operations across branches. While this is true to some extent, customers are overloaded without their knowledge for several services, particularly by private banks.

Customers should therefore be mindful of all such charges and, if not happy, can switch to another bank with lower / genuine charges or opt for a zero balance account. Compare the costs of different banks and service standards to get the best possible banking solution.

The Reserve Bank of India (RBI) has no specific guidelines on closure charges and therefore it is entirely up to the bank's discretion to charge service charges. Although the RBI did not provide guidance on these charges, it asked banks to ensure that account holders with a low activity volume should not be penalized while charging.