Three or four accounts are enough for one family. Having more increases paperwork and can be misused as well.
It’s a problem that most salaried people face. When shifting jobs or cities, the new company would ask you to open an account with their bank. So, what should you do with the old account? Most of us just forget about it.
But, it could come back to haunt you. For instance, when you are filing income tax returns, the assessing officer may seek data of all your accounts or as the Cobrapost revelations show, it might even be misused to launder black money. 
K V S Manian, group head- consumer banking at Kotak Mahindra Bank, says, “Despite all these problems, there isn’t much awareness among customers. Customers don’t bother closing their accounts formally, if the account has no balance and is going to be of no use to them in future.”
According to Reserve Bank of India’s definition, an account not used for 12 months, becomes inactive, and if that period exceeds 24 months, the account is declared dormant. The exact period after which a bank declares the account inactive or dormant varies from bank to bank.
The best way to safeguard your bank account is to not use multiple accounts and close the ones which are not needed.
One can do so by submitting a formal letter to the bank. “It takes about three or a maximum of five working days for banks to close an account. The account holder doesn’t need to submit any documents for closing the account,” adds Manian of Kotak Bank.
One could face problems in closing a bank account if it is jointly held and one of the account holders expires or the bank is unable to trace the account holder in case of change of residence. Closing an account which has no nomination can also be difficult. Reason: The family member has to obtain an inheritance certificate from the court and submit it to the bank, which is time consuming and tedious, too. Hence, make sure your account-related data, such as mobile number, residence address and email IDs are current. “This will help banks trace the account holder immediately in case there is any problem related to his account,” adds Ram Sangapure, general manager at Syndicate Bank.
Another issue with retaining unwanted accounts is savings bank accounts earn only four per cent interest, whereas current accounts earn no interest at all. Calculating interest income on all such accounts at the time of filing returns may lead to confusion.
Suresh Sadagopan of Ladder7 Financial Advisory Services says with youngsters changing jobs rapidly, people today have more than one savings bank account. “Three to four bank accounts per family should be manageable. Anything above that should be kept only if its unavoidable and very important.”
Sangapure says, “To prevent falling prey to such traps, one should complete the bank KYC (know your customer) norms when investing or opening accounts. Preferably open a bank account by submitting your PAN, since it acts as a better proof of identity than other documents and will be easier for banks to keep records.”
Banks usually inform account holders two to three months in advance before declaring the account inactive. Hence, customers should keep a watch for such warnings and cautions raised by their banks and take necessary action on it.
