You must inform bank if you continue your salary account with a new employer

Changing jobs can be a difficult task. Not only does it involve a lot of paperwork before or on the date of joining, many documents also have to be submitted to the new employer. Apart from this, opening a salary account is another important task.

However, if you plan to continue the same salary account with the new employer (assuming they have the same bank), do not think your work is done by just handing over your account details to your new workplace. The bank, too, has to update the new employer's information in its records. How this is done may differ across banks.

How does it work?

Ways to update these records vary across banks. For instance, HDFC Bank asks its customers to visit the nearest branch with a letter or email from the corporate ID of the new employer. The text must mention the complete name, account number and state that the customer has joined the company. Kotak Mahindra Bank asks the customer to submit a government-approved identity document, along with a proof of employment from the new employer. This can be done by getting in touch with the respective bank's relationship manager or by going to the nearest branch. In case of State Bank of India, a customer can inform the bank's branch regarding the change in employer through a letter. You can also send a scanned copy of the letter via email.

What happens if you don't inform your bank?

It is advisable to update the bank with the new employer's information as lenders usually convert the account into a savings account if it does not receive salary by the registered employer for three months in a row. During this period, banks usually inform their customers, either through a letter or e-mail, that the salary account will be converted into a savings account.

If a salary account gets converted into a savings account, the account holder has to pay any non-maintenance charges that are applicable. You also lose benefits that are associated with a salary account such as zero-balance maintenance, no annual fee or joining fee on debit cards, and others.

Our take

Continuing a salary account usually makes matters easy since you don't have to close an account and open a new one. Many people don't close their previous account, which leads to holding an account unnecessarily. Following a small procedure will help the bank as well as you be served better. However, if you are asked to open an account with a different bank at your new workplace, you must choose between closing the previous salary account and maintaining the minimum required balance. Weigh your needs for multiple accounts and act accordingly.

In arrangement with HT Syndication | MINT

This article was originally published on September 09, 2016.