Zero Balance Account – Eligibility, Features and Benefits
A zero balance savings account acts just like any other savings account; however, it can operate without the need to maintain a minimum balance. This facility was the brainchild of the Pradhan Mantri Jan Dhan Yojna (PMJDY), which facilitated financial freedom, especially for women and rural communities.
In contrast to normal savings accounts, zero balance savings account holders can continue using their account even if they have zero balance.
Read on to know more about zero balance savings accounts, their benefits and the top banks that offer this facility.
What Is a Zero Balance Savings Account?
Zero balance savings accounts are restriction-free savings bank accounts that offer similar interest rates as regular savings accounts. Unlike regular bank accounts, they have no age restrictions, and one can apply for an account by producing only their Aadhaar card.
The primary goal of zero balance savings accounts is to make banking accessible to the weaker sections of the society. Like a regular savings bank account, the zero balance variant offers basic banking services like ATM withdrawals, fixed deposits or a Demat Account facility. However, banks generally put transaction restrictions for these accounts, failing which can demand penalties.
Features of Zero Balance Savings Accounts
Most Indian nationalised and private banks offer zero balance account facilities. Under PMJDY, every individual is entitled to a bank account irrespective of their past bank account status. Some salient features of zero balance accounts are as below:
No Limit Constraints
Normally, savings bank accounts require customers to maintain a minimum balance to avoid penalties. However, zero bank accounts do not require a minimum balance, thus making them especially suitable for students and minimum wage earners.
Inclusivity
The PMJDY has encouraged the creation of more than 32 crores of bank accounts in one year. With an additional boost from the scheme, zero balance accounts have made genuine progress toward financial inclusion, especially in the weaker sections of the society.
Unrestricted Access
Zero balance accounts can be accessed from anywhere via internet banking and ATM/Debit cards. They also follow traditional banking instruments like cheque books and SMS banking. These accounts also allow customers to do online transactions, including bill payments and shopping.
Interest Income
Like normal savings bank accounts, zero balance variants allow customers to earn interest income on their deposits. However, the interest rates and other terms adhering to it may vary from one bank to another.
Benefits of Zero Balance Savings Accounts
Some common advantages of opting for zero balance accounts are as follows:
- Zero balance savings accounts are simple financial instruments to make banking services accessible. Services may include crediting remittances, insurance or pension in these accounts.
- A normal savings bank account requires potential customers to submit important documents containing personal details. Plus, the process generally takes up to 7 days, depending on the account type or the bank’s location. However, zero balance accounts do not require extensive documents and can be activated instantly.
- Apart from earning interest income on deposits, zero balance account holders can also use Rupay or Debit/ATM cards to withdraw money.
Zero balance account holders are eligible for direct transfer benefits and other government benefits. Additionally, they can claim accident insurance covers of up to Rs 1 lakh (Rs. 2 lakh from 28th August 2018 onwards).
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How to Open a Zero Balance Savings Account?
Any eligible individual can open a zero balance savings bank account either by visiting the bank or online. To open an account physically, he/she must carry a passport-size photograph, PAN card or Form 60 and any personal identification, viz., Aadhar card, passport, voter’s identity card, etc.
For an online zero balance savings account opening, one needs to have a copy of all the documents mentioned above. After visiting the website of your preferred bank, browse to the application section. The applicant needs to fill in personal details and will get an account number/customer ID on successful verification.
Most banks provide Rupay cards within 7 days of application. The applicant can also apply for internet banking facilities with their new account. These accounts do not carry any charges associated with opening and maintenance. However, the account holder must make some deposit immediately after opening the account.
Eligibility to Open a Zero Balance Savings Account
Any Indian citizen above the age of 10 years is legally entitled to open a zero balance savings bank account. Most banking institutions require applicants to produce identification proof and their PAN cards.
A zero balance savings account lets everyone open a bank account irrespective of their employment status. Under the PMJDY, anyone can open these accounts irrespective of location. These accounts are exceptionally beneficial to students and individuals who do not have stable income sources.
Documents Required for Zero Balance Savings Account Opening
Anyone can open a zero balance savings account online with the following documents:
- Aadhar and PAN card.
- Some banks also require other documents for opening such accounts. They might include a passport, permanent driving license, NREGA job card signed by a government officer or letters issued by the National population register containing personal details.
Best Zero Balance Savings Accounts in India
Under the PMJDY, all Indian banks (nationalised/private) are capable of facilitating zero balance accounts. Some banks offering zero balance savings account opening via online mode are:
- SBI Zero Balance Account: SBI allows applicants to apply for a zero balance account by producing basic KYC documents. It also offers free debit cards with free cash withdrawals from SBI ATM kiosks and up to 4 withdrawals from other bank ATMs.
- Axis Bank Zero Balance Account: These accounts allow holders to deposit cash without incurring charges. They provide convenience in terms of transactions and provide basic banking instruments. This includes providing account holders with passbooks and ATM/debit cards. They also provide interest income of 3%-4% per quarter.
- IndusInd Bank Zero Balance Account: Codenamed Indus Delite, these accounts can be opened instantly and offer attractive cash backs on online or offline purchases. These accounts require an initial deposit of Rs. 10,000 and Rs. 500 for a debit card. Debit card purchases attract additional rewards like reward points and movie tickets.
- IDFC First Bank Partham Zero Balance Account: With a free personal accident insurance cover up to Rs. 2 lakhs and daily ATM withdrawal of Rs. 25,000, This account offers interest income at 4% up to Rs. 10,00,000.
- Standard Chartered Zero Balance Account: Apart from allowing customers to maintain a zero balance account, SC accounts allow unlimited ATM access. They do not charge for basic banking services like bank visits, ATM withdrawals, chequebooks, debit cards, etc.
- Kotak 811 bank Zero Balance Account: The Kotak 811 bank account provides access to free virtual cards, credit cards against fixed deposits and up to 4% interest per annum. This account allows seamless money transfer and allows internet banking.
Things to Keep In Mind before Zero Balance Savings Account Opening
Owing to their ease of opening and maintenance, zero balance accounts have become increasingly popular, especially in regions where regular banking services suffer due to unstable employment conditions. There are certain things that customers should keep in mind before applying for a zero balance savings account online.
- Advantage of Full KYC verification: Savings bank accounts with no minimum balance requirement need minimal KYC verifications. However, customers are entitled to use the account fully only after full verification. Verification provides unlimited validity to the account and puts no limits on deposits and transactions. Some banks offer interest income only after full KYC verification.
- Seamless online banking: Performing banking operations by personally visiting the bank might be difficult, especially in remote locations. Digitisation simplifies banking and also is subject to strict security parameters. Before opening a zero balance savings account, one must make sure that the associated bank offers internet banking facilities against their zero balance accounts.
- Obtaining physical debit cards: Debit cum ATM cards ease banking operations, especially for online transactions. However, most private banks charge a nominal amount for application. Also, the customer must have enough balance in their zero balance account to apply for a card.
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Final Word
Despite the limitations on withdrawals and deposits, zero balance savings accounts are absolute lifesavers for new account holders. Savings bank accounts with no minimum balance requirements operating under PMJDY have boosted financial progress, especially in low-income states.
Frequently Asked Questions
Ans. Yes, all zero balance accounts are compatible with UPI, RTGS/NEFT and IMFT payments apart from normal internet banking and ATM withdrawals.
Ans. Yes, customers can convert their zero balance accounts to normal savings accounts. They need to visit their bank, submit all personal documents and write a letter to the branch manager stating the reason behind the switch.
Ans. It reduces their dependence on local money lenders who charge exorbitant interest rates. Plus, they can access their accounts without physically visiting the branch. Financial literacy is expected to rise exponentially with zero balance accounts.
Ans. If you don’t use your zero balance savings account for a specified period of time, it will become dormant, and ATM transactions and internet banking will get discontinued. You must activate it again to continue enjoying its benefits.
