To provide financial services in affordable manner to the weaker sections and low-income segments, in the annual statement policy 2005, Reserve Bank of India had advised banks to review their existing account related conditions to align them with the objective of financial inclusion. With a clear goal to achieve higher financial inclusion, banks were advised to offer ‘no-frills’ accounts either with nil or very low minimum balance requirements and also with no or low charges. When they didn’t see any significant growth in financial inclusion (after offering ‘no-frills’ accounts); then RBI had decided to modify the guidelines to open basic banking ‘no-frills’ accounts.
As per new guidelines, banks are advised to offer Basic Saving Bank Deposit Accounts with no minimum balance restrictions along with no or very low charges. As per new instructions, all the existing basic banking ‘no-frills’ accounts should be converted to Basic Saving Bank Deposit Accounts. Banks were advised to offer following minimum facilities to all their customers:
- There should not have the requirement of any minimum balance.
- The Basic Saving Bank Deposit Account should be considered a normal banking service.
- An account holder will be allowed a maximum of four withdrawals in a month, including ATMs transactions and no such limit for deposits. Balance enquiry through ATMs should not be counted in four withdrawals.
- Facility of ATM-cum-Debit Card
- The above facilities will be provided without any charges
- Banks are free to offer additional value added services with or without any additional charges along with those prescribed by RBI.
Eligibility to Open a Zero-Balance Account under Pradhan Mantri Jan-Dhan Yojana (PMJDY)
- An Individual who holds Indian nationality can open an account under PMJDY.
- An individual, who does not have a valid document to prove that he’s an Indian but banks categorize him/her as ‘low risk’.
- An individual, who has an existing saving bank account with the bank, can shift his/her account in Pradhan Mantri Jan-Dhan Yojana (PMJDY).
- There’re no upper-age limit and income restrictions to open a zero balance facility account under Pradhan Mantri Jan-Dhan Yojana (PMJDY); however, a minor should be more than 10 years old; if he wants to open an account under PMJDY.
Conditions to Open a Basic Saving Bank Deposit Account under Pradhan Mantri Jan-Dhan Yojana (PMJDY)
- The customer cannot have any other saving account in the same bank (where he has opened BSBDA); however, customer can open other deposit accounts in the same bank for example; Fixed Deposit, Recurring Deposit etc. If he/she already has a saving account in the same branch then he/she has to close that account within 30 days from the opening of BSBDA.
- If he/she fails to close an existing saving account within the specified period then banks are free to close such accounts after 30 days.
- If an individual already has a saving account then he/she can transfer his/her account into PMJDY to avail the benefits. In short, no need to open a BSBDA if you already own a saving account; just convert it into BSBDA by visiting your bank branch.
- Maximum four withdrawals in a month; thereafter, service charges will apply.
- Receipt or credit of money through electronic payment channels will be free.
- Customers do not intend to maintain an account balance higher than Rs 50, 000.
Benefits of Zero Balance Account or Basic Saving Bank Deposit Account
It is crystal clear that Basic Saving Bank Deposit Accounts are mainly tailored to provide financial services to the poor sections and low income groups; therefore, banks have reduced their service charges as much as possible. Indeed, these initiatives will increase financial inclusion; just we have to develop awareness and action to meet the desired goal. Here are some benefits of Basic Saving Bank Deposit Account:
- No requirements to maintain minimum balances
- Free of cost ATM-cum-Debit card facility; no annual maintenance charges
- Free four transactions including ATM transactions; no such limit for deposits
- You get overdraft facility after satisfactory operation of the account for 6 months
- You receive interest rates as applicable on regular saving accounts
- You get free internet and mobile banking facilities
- You get free cheque book facility with certain limits
- You get Life Insurance cover of Rs.30, 000 and Accidental Insurance cover of Rs 1Lakh without paying premiums with Rupay card.
- Access to insurance and pension products
- Free pass book
- No initial payment required to open an account under PMJDY
- Auto-term deposit creation once account balance reaches at specified limits
- Free monthly email statement
How to Open a Basic Saving Bank Deposit Account under Pradhan Mantri Jan-Dhan Yojana (PMJDY)
Any individual can open a basic saving bank deposit account under Pradhan Mantri Jan-Dhan Yojana (PMJDY) in any bank. Pradhan Mantri Jan-Dhan Yojana (PMJDY) focuses on rural as well as urban areas to provide universal access to financial services to every citizen. Basic saving bank deposit account would subject to RBI guidelines on KYC (Know Your Customer)/AML(Anti-money Laundering). In addition if basic saving bank deposit account is opened on the basis of simplified KYC norms, then such account will be treated as ‘basic saving bank deposit account-small account’. Just follow the steps given below to open a Basic Saving Bank Deposit Account under Pradhan Mantri Jan-Dhan Yojana (PMJDY);
- Visit a bank branch (in which you want to open a Basic Saving Bank Deposit Account under Pradhan Mantri Jan-Dhan Yojana) and ask whether the bank offers BSBDA or not.
- If the bank offers such accounts then just fill out an account opening form and submit it along with all necessary documents (Note: If you already have a saving account in the bank then you can convert that into a Basic Saving Bank Deposit Account).
- That’s it. You’ll receive your passbook, Rupay card, internet and mobile banking password along with user id etc by post or your bank will instantly give you these things at the time of account opening.
Disclaimer: Your bank may or may not give you some facilities listed herein.