From cheque books and withdrawals to minimum balances, the RBI has made tweaks to many aspects of a basic savings account.
The latest notification of the Reserve Bank of India (RBI) is aimed at banks that offer Basic Savings Bank Deposit (BSBD) Account. These savings accounts, popularly known as ‘no-frills’ accounts, require no minimum balance.
In 2005, to include a large section of the population in government’s financial plans, the RBI had introduced the concept of a basic ‘no-frills’ banking account. With zero or minimum balance, these accounts are for people from the lower income groups or those who cannot afford to keep a minimum balance of say, Rs 10,000 in the bank (the amount is characteristic of a normal savings account).
Although the account did not require a minimum balance, it did not provide other facilities that are common of other accounts.
RBI’s new rules instruct banks to provide the following minimum facilities to account holders without charge. The rules are to be imposed from 1 July, 2019.
- One such update is the provision of cheque books to account holders without charging for it.
- Additionally, there will be no limit on the number and value of deposits that an account holder can make in a month.
- Banks will provide a free ATM or an ATM-cum-Debit card.
- Banks will now allow a minimum of four withdrawals in a month without imposing a fee for it. These withdrawals include those made at the ATMs. This rule has been tweaked from the old one which allowed account holders a maximum of four free withdrawals in a month.
- Receipt or credit of money will be provided through any electronic channel or by means of deposit or collection of cheques. Central or State agencies and departments will draw these cheques.
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- “Banks are free to provide additional value-added services, including the issue of cheque book, beyond the above minimum facilities, which may/may not be priced (in a non-discriminatory manner) subject to disclosure. Availability of such additional services shall be at the option of the customers. However, while offering such additional services, banks shall not require the customer to maintain a minimum balance. Offering such additional services will not make it a non-BSBD Account, so long as the prescribed minimum services are provided free of charge,” the RBI said.
It is important to mention that the holder of a BSBD account is not eligible to open any other account in the same bank. In the case that this happens, the account holder will have to terminate other existing savings accounts within 30 days.
(Edited by Saiqua Sultan)