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    Closing your bank account may take weeks if you don't check these 4 factors


    It is not uncommon to have multiple bank account and sometime people can not operate all of them and hence may need to close one. However, you may get a surprise if the bank turns down your request to close your savings bank account citing many pending issues. Therefore it is better to check these factors before going for closing your saving bank account.

    Bank account closureGetty Images
    Bank account closure
    If you think that closing your savings bank account would be a breezy, one-day or one-click affair, think again. It may take from a few days to a few weeks to settle some issues first so that you are in a position to close your bank account. While some of these issues may be minor, others may need more time and effort. So, if you are planning to close your bank account anytime soon, know about these issues and the ways to deal with them.

    Things you must do before closing your bank account
    Typically, closing a bank account is not a complex process. But many payments and receipts are tied to a bank account. Ignoring these while closing an account can cause a lot of trouble. “Terminating a bank account nowadays is not a complex process but a customer has to keep a note of a few items before closing his account,” says Raj Khosla Founder and MD of

    Issues that prevent closure of a bank account and what to do about it
    Before you plan to close your bank account, check if you are likely to encounter some of these factors that can delay the process:

    Pending transactions in savings bank account: If there is any pending transaction, then you will have to wait for it to be executed. “If there are pending transactions in the account, such as pending deposits, withdrawals, or checks that have not cleared, the bank may require you to wait until these transactions are resolved or completed before allowing the account closure,” says Adhil Shetty, CEO of

    Negative balance in savings bank account: A bank may not allow closing of an account if the balance amount is in the negative. “The negative balance could be due to non-maintenance of the minimum balance (which can attract penalties) or other service charges or fees,” says Shetty. So check your bank balance before starting the account closing process.

    Monthly payment mandates active in savings bank account: You will have to shift the monthly debit mandate linked to the account you want to close to another account. “If you have set up your savings account to automatically pay EMIs, bills and monthly subscriptions, it's crucial to cancel any standing instructions or automated clearances associated with that account. Update these automatic clearances to link them with another account. This action will help prevent any defaults or delays in loan EMIs, which could negatively impact your credit score and financial history,” says Shetty.

    Linked to payment of bank locker rental: If you have hired a bank locker and the rent payment is linked to the account you want to close, find an alternative bank account to link the payment. “Banks don’t allow customers to terminate a savings account that is being utilised to furnish the rental payment for a bank locker. There won’t be an issue in terminating a savings account if you can manage to swap the old account with a new account, effectively allowing the bank to use the new account to oblige upcoming rental payments,” says Khosla.

    Precautions to take to ensure no issues crop up later
    Closing a bank account is an irreversible process. If it is done in a hurry without proper preparation, it can have far-reaching consequences. Once an account is closed, you will no longer be able to get any information about it. Therefore, you must take these precautions to ensure you do not regret the decision later.

    Download statement or update your passbook: You should have complete records of all transactions till the date of closure. “When closing a savings account, it is advisable to follow several important steps. Firstly, it's essential to check your account balance and download the account statement. Keeping this statement for 2-3 years is recommended as it can be valuable for future reference, especially when you need to review specific transaction details from that account. Additionally, the statement is crucial for filing your Income Tax Return,” says Shetty.

    Avoid closure charges by waiting for right time: You may have to pay a penalty if a new account is closed before a particular time period. “Sometimes banks charge a fee for closing an account within a year of its opening. To avoid paying account closure charges, you should wait at least one year,” says Shetty.

    Update new account in government schemes and regulatory platforms: Savings bank accounts are listed for receiving benefits from various government schemes such as the Employees' Provident Fund Organisation (EPFO) or insurance policies. These accounts are also linked to the Income Tax Department for tax payments and refunds. “In such instances, before initiating the account closure process, make sure to update your new account details across all these services and savings schemes,” says Shetty.

    Khosla says aadhaar-linked bank accounts would be required in the future to continue receiving benefits such as stock dividends, income tax returns, EPFO and government-aided direct benefit transfers.

    Update your new account first with your mutual fund SIPs: If the account is linked to mutual fund investments, particularly for SIPs, update these records with an alternative account to avoid a failed payment. “Also, when you withdraw money from your mutual funds, the funds are often directly credited to your savings account. Therefore, don't forget to update your new account details for all your mutual fund investments,” says Shetty.

    Stop utility bills and other auto debit instructions: You must stop all auto debit instructions linked to the account you wish to close. "This includes halting all the standing instructions and auto-debit instructions for loans, EMIs, utility bills, premiums for insurance policies, as well as SIPs," says Khosla.

    How to close inoperative bank account
    In case of non-maintenance of balance, will an inoperative account keep accumulating fresh charges? “Inoperative or dormant accounts don’t attract any penalties due to non-maintenance of minimum average balance as the RBI had mandated all the banks to stop levying charges on accounts that haven’t seen any activity in more than 2 years,” says Khosla.

    However, if your bank account had a negative balance before becoming inoperative, you may have to clear the dues to make it operative. “In order to close such an account, you should reach out to the branch that holds your account to understand the account closure process,” says Khosla. Typically, the bank will ask you to submit an application stating the reason for non-operation of the account and furnish your KYC documents. Once the account becomes operational, you can proceed with a closure request.

    Time to transfer EMIs from one bank to another bank
    If you have standing instructions for account debit, make sure that these are changed before closing the account . “Using the NACH mandate, you can immediately update your payments to be deducted directly from your new account,” says Shetty.

    You should try to estimate how much time it will take to switch to another bank. “Typically, it takes 24 to 48 hours to update your details in your loan account. It may take longer in case of mismatch in details. That is why, make sure you have already paid your outstanding EMI and immediately initiate the shifting and complete the process before the due date of another EMI comes up,” adds Shetty.

    However, there is no standard time frame when this process can be completed . It depends on the banks processing the change request. Khosla says some banks do it within a couple of days and others can take a week to transfer EMI auto debit from another bank.

    Shifting SIP deduction mandate to another bank
    Make sure you also shift MF SIPs mandate from the account you want to close to another account before starting the closure process. “When you create your mutual fund account through apps or online, you have the option to put your bank details and select the date when you want the funds to be debited from your account to your SIP. You can update your bank details within 48 hours, mostly, but it can take longer. In certain cases, it gets done immediately,” adds Shetty.

    You can also do this by submitting a request at your bank’s branch. “Banks entertain written requests to halt SIP payments. Once the National Automated Clearing Housing (NACH) mandate requirement to pause an SIP is met, an asset management company (AMC) could take up to 21 days to discontinue the SIP,” adds Khosla.
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