Mul­ti­ple Bank Ac­counts may Just be More Pain than Gain

It’s bet­ter to limit your sav­ings a/cs as dor­mant ones are prone to fraud, says Preeti Kulka­rni

The Economic Times - - Markets & Finance -

How many sav­ings ac­counts does a per­son ac­tu­ally need? Many fi­nan­cial ad­vi­sors are busy an­swer­ing this ques­tion these days, as they try to ed­u­cate their clients af­ter the Re­serve Bank of In­dia (RBI) abol­ished the penalty for not main­tain­ing a min­i­mum bal­ance in in­op­er­a­tive sav­ings bank ac­counts. In­di­vid­u­als end up with more ac­counts than needed when they switch jobs or opt for fea­ture-rich ac­counts, with­out clos­ing their ex­ist­ing ones. Ex­perts say that the abo­li­tion of penalty should not be an ex­cuse to hold on to ac­counts that one doesn’t use reg­u­larly.

“Ideally, one should main­tain one or, at best, two sav­ings bank ac­counts,” says VN Kulka­rni, chief credit coun­sel­lor with the Bank of In­dia-backed Ab­hay Credit Coun­selling Cen­tre. “Both should be joint ac­counts with the spouse or any close rel­a­tive. If you do not want to have a joint ac­count, en­sure that that a nom­i­na­tion is made. If you are deal­ing in shares or any other busi­ness ac­tiv­ity on an in­di­vid­ual ba­sis, you can main­tain an over­draft ac­count. In case of reg­u­lar busi­ness ac­tiv­i­ties, a cur­rent ac­count is re­quired to be opened,” adds Kulka­rni.

Case Against Mul­ti­ple Ac­counts

Ex­perts feel that there are many rea­sons for lim­it­ing the ac­counts to a min­i­mum of one or two. Main­tain­ing mul­ti­ple ac­counts would mean one has to con­stantly mon­i­tor all of them. Most in­di­vid­u­als are not adept at this task. “It is im­por­tant that cus­tomers close their ac­counts if they do not in­tend to use them at all, else they ex­pose the ac­count to po­ten­tial fraud,” says Japjit Bedi, di­rec­tor, de­posits and wealth man­age­ment, pri­vate and busi­ness clients, Deutsche Bank In­dia. It could be a se­ri­ous threat if you do not in­form your bank about any change in your con­tact de­tails. The bank would com­mu­ni­cate to your old ad­dress or phone num­ber, and you may not come to know about fraud­u­lent ac­tiv­ity. The RBI has is­sued in­struc­tions to banks for con­tact­ing ac­count hold­ers of dor­mant ac­counts. They may con­tact the in­tro­duc­ers or ac­coun­tholder’s em­ploy­ers, in case ac­coun­thold- er’s con­tact de­tails are not avail­able. How­ever, you need to be care­ful too. “Frauds can oc­cur, at times, in col­lu­sion with in­sid­ers, as they know that the ac­count holder has ei­ther for­got­ten about the ac­count or has shifted and is not likely to re­turn. So, fraud­sters ini­tially with start by mak­ing a small with­drawal; keep a watch for some time and there­after with­draw the en­tire bal­ance. De­spite var­i­ous sys­tems that are in place, frauds do take place in in­op­er­a­tive or dor­mant ac­counts,” says Kulka­rni. It is in the in­ter­est of cus­tomers to ap­proach the bank, sub­mit re­quired documents and get the ac­count closed or re­ac­ti­vated.

Clos­ing or Re­ac­ti­vat­ing Ac­counts

If you are con­vinced on not keep­ing in­nu­mer­able ac­counts, go ahead and close them. You just need to fol­low a few sim­ple steps for the pur­pose. “All banks have stan­dard forms for clos­ing an ac­count. This form should be signed by the ac­coun­thold­ers depend­ing on the mode of oper­a­tion and all un­used cheques or debit card will have to be ei­ther re­turned to the bank with the form or de­stroyed by the cus­tomer,” says Bedi. If your ac­count shows some bal­ance, you will have to spec­ify the mode of pay­ment — funds trans­fer, de­mand draft or banker’s cheque — for trans­fer­ring this amount to your op­er­a­tive ac­count. “Do note that some banks levy a charge for clos­ing ac­counts be­fore ex­piry of a spec­i­fied pe­riod of time,” points out Bedi.

If you want to re­ac­ti­vate any ac­count af­ter re­view­ing your hold­ings, en­sure your bank gives you your due. “Af­ter the ac­count is ac­ti­vated, you must as­cer­tain whether in­ter­est has been cred­ited,” adds Kulka­rni. As per RBI in­struc­tions, in­ter­est on sav­ings bank ac­counts should be cred­ited on reg­u­lar ba­sis, ir­re­spec­tive of whether the ac­count is op­er­a­tive or not. “For ex­am­ple, if a fixed de­posit re­ceipt ma­tures and pro­ceeds are un­paid, the amount left un­claimed with the bank will at­tract sav­ings bank rate of in­ter­est,” he says.

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