Why someone shouldn’t open multiple bank accounts in India
Do you know, having multiple bank accounts can lead to loss of money and additional penalty? Here is why you must always ignore this idea.
Every individual living in a society highly depends on banks for financial assistance or to secure their money. With that people keep comparing the services offered by different banks, so that they can avail the best benefits from their investments.
Similarly, we can see the rising competition in the banking sector that either way insists common people to indulge into certain practices that at times leads to bizarre consequences.
Nowadays, opening ‘multiple bank accounts’ has become a common idea for people. One needs to open a new bank account in order to receive salary after joining a company, switching to a new job or some other reasons.
Have you ever thought of the contradictions and issues behind this practice? Let’s try to put light on this factor and see, how having multiple bank accounts can damage your expenses and lead to unhealthy practices.
Maximum numbers of companies have a tie-up with respective banks. Once an employee joins a company, that employee is forced to open a bank account in a particular company for receiving their salary. Accordingly, the banks receive active users which benefits them in long run. But it’s not wise to open a new account for every single company you join, because this way the number of accounts keeps growing, ultimately creating issues for you in future.
Opening multiple bank accounts result in draining your finances in the form of an Average Monthly Balance (AMB). For example, if a bank has the criteria of maintaining Rs 10,000 in a savings account, the user is forced to maintain the minimum balance in every account. But in case you fail, the bank imposes imposing penalty on the customer. It eventually disrupts an individual’s financial management.
When there is no transaction in a bank account for more than a year, the account is treated as a ‘Dormant’ account as per RBI Guidelines. This restriction doesn’t allow the user to avail any of the facilities provided by their bank and demand penalty to retrieve it.
According to a report Published by Business Standard on November 2021, the finance minister of India, Nirmala Sitharaman informed that ‘As much as Rs 26,697 crore was lying unused in dormant accounts of banks, which includes cooperative banks as well. Opening multiple bank accounts is one of the major causes behind the increasing number of dormant accounts.
Bank accounts opened with zero balance for salary purpose or other temporary aspect ends up becoming a savings account with Average Monthly Balance. This costs every employee or a layman’s pocket.
It is mandatory to open a bank account for professional transactions and to secure money. But one should not be forced to get into banking institutions for financial transactions. Opening of multiple banks accounts for a single person is always a matter of concern.
Kalinga AI