Many people decide to close their bank accounts due to inactivity, charges, or simply because they switch to a different bank. But before taking this step, it is important to understand that closing a bank account is not always free. Banks may apply several charges, and you must complete specific formalities to avoid penalties.
Outstanding Dues Must Be Cleared First
If there are any pending charges such as minimum balance penalty, debit card fees, locker rent, or cheque book charges, the bank will not allow account closure until all dues are cleared. In some cases, the outstanding amount continues to grow with additional penalties.
Return or Cancel All Banking Instruments
Before closing an account, the customer has to return the cheque book, passbook, debit card and any other material issued by the bank. If any cheque is pending or issued but not cleared, the closure process is delayed until all transactions settle.
Account Closure Charges May Apply
Many banks charge an account closure fee, especially if you close the account within one year of opening it. The charges may vary depending on the type of account. Salary accounts are usually free to close, but regular savings accounts and current accounts may involve closure fees.
Transfer Your Balance Before Account Closure
If the account holds any money, you must withdraw or transfer the remaining amount before submitting the closure form. The bank will not close the account if the balance remains inactive or unclaimed in the system. For large amounts, some banks may require identity verification.
Auto-Pay and EMI Mandates Must Be Cancelled
If your bank account is linked with any auto-debit instructions such as insurance payments, SIPs, loan EMIs, OTT subscriptions or utility bills, you must cancel them beforehand. If these mandates remain active, the bank will decline the closure request and may charge penalty fees for failed transactions.
KYC Must Be Updated Before Closure
Banks require updated KYC before processing the closure. If your KYC is incomplete or outdated, you will be asked to submit valid ID proof, address proof and recent photographs. Without KYC compliance, the bank can legally withhold the process.
Closure Time Depends on the Bank
Most banks take between 5 to 10 working days to close an account after all formalities are completed. During this period, you must ensure no transactions are initiated from your side. Once closed, the bank will issue an official account closure acknowledgment.
Table
| Type of Charge | Details |
|---|---|
| Early Closure Fee | Applicable if account closed within 12 months |
| Account Closure Form | Mandatory for all customers |
| Pending Dues | Must be cleared before closure |
| Auto-Debit Cancellation | Customer must cancel all standing instructions |
| KYC Requirement | Updated KYC needed before closing |
Final Advice
Before closing your bank account, check your statements properly, clear all dues, cancel all mandates and ensure your KYC is updated. Understanding these rules will help you avoid unexpected penalties and ensure a smooth closure process.
