What Is No-Frills Account – Its Eligibility, Documents Required And How to Apply
No Frills Account is a type of bank account that requires an individual to maintain a negligible or no minimum balance along with following some simple KYC norms. The Reserve Bank of India came up with this account in 2005 to provide banking facilities to customers who have low-income backgrounds. Services such as withdrawals, debit cards, etc., are available at zero charges.
In 2012, the RBI renamed No Frills Account to Basic Savings Bank Deposit Account (BSBDA). Read on to know its features, how to open a no-frills account or BSBDA, documents and eligibility and its benefits.
Features of No-Frills Account
Here are the features of no-frills accounts:
- A no-frills account holder can open and maintain a savings bank account with a zero balance.
- They can also avail of basic banking services such as internet and mobile banking, a debit card free of cost and access to ATMs across the country.
- A no-frills account holder has the option to receive free quarterly account statements to their email id.
- The service charges applicable will be much lower in comparison to the regular savings account.
Eligibility for No Frills Account
Anyone who fulfils the following eligibility criteria can open a no-frills account:
- The person must be a citizen of India
- Should have valid KYC documents
- Single or joint mode of operation is permitted
- Individuals, including minors who are 10 years old, as well as pensioners are eligible to open a BSBDA.
- NRIs, organisations and institutions are not eligible
Documents Required for No-Frills Account
Here are the documents that are required for opening a no-frills bank account:
- Address proof such as voter card, Aadhaar card, ration card, PAN card, etc.
- Proof of date of birth such as an Aadhaar card, voter card, ration card, etc.
- Documents for KYC verification such as PAN card.
How to Open a No-Frills Account
An individual can open a no-frills account at any preferable bank or branch as long as they have all the necessary documents.
However, you can only open a no-frills account if you do not already have a savings account with the bank. The customer will be required to submit basic KYC documents to open this type of account.
An undertaking will have to be given in case a customer wants to convert their savings account to no-frills account. In such a case, the customer will have to close the savings account within 30 days of opening a no-frills account. However, a customer can open fixed or recurring deposit accounts with the banks with the funds of no-frills account.
Advantages of No-Frills Account
Here are some advantages of a no-frills savings account:
- It is considered a regular banking service and is available to everyone
- An individual needs zero or meagre minimum balance to open such a bank account
- There is no specific limit on the number of deposits
- The ATM card facility is available free of cost
- A no frill account holder can withdraw money as many as four times in a month, including ATM withdrawals.
- If an account holder does not operate the account for an extended period, no extra charges will be levied.
- Some banks also offer nomination facilities with no-frills accounts.
- You can also get internet banking facilities; however, they might be chargeable.
RBI Guidelines on ‘No-Frills’ Account
In 2012, the Reserve Bank of India asked all nationalised banks to drop the ‘no frills’ tag from the basic savings accounts. This was done to stop the stigmatisation of the nomenclature.
In addition, RBI has asked banks to provide zero-balance facilities with all basic banking accounts. This comes with the advantage of ATM-cum-debit cards without any added charges. This has been done to make banking facilities available more uniformly across all sections of society.
According to the circular of RBI to the scheduled commercial banks, there has been a modification in the guidelines on opening basic banking no-frills accounts. This will also benefit those covered under welfare schemes such as Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
Things to Keep in Mind before Opening a New No-Frills Account
Here are some of the things that should be kept in mind before opening a no frills account:
- You can only have one no-frills account.
- An individual can deposit a maximum of Rs. 50,000 in the account at one time.
- The total credit in your account should not exceed Rs. 1 lakh in a year.
- Banks offer core banking facilities to customers opening a no-frills account.
- Foreign currency can only be deposited in a no-frills account once the KYC procedures are complete.
- You cannot hold any other type of savings account in the same bank where you hold the no-frills account.
- No-frills account is treated as a small account, and therefore, all the restrictions regarding small accounts will be applicable.
- The maximum limit of withdrawal made in a particular month is Rs. 10,000.
Final Word
Although there is no fundamental difference between the functioning of a basic savings bank deposit account and a no-frills account, different banks might offer certain value-added services to customers. A no-frills bank account is ideal for those account holders who do not have the need to use their accounts regularly. If you want to open a basic savings bank deposit account, you can visit the websites of the different banks to understand the services they offer.
FAQs
Ans: No, the no-frills account or basic savings bank deposit account is a normal banking service and available to all citizens across the country. Only NRIs, organisations and institutions do not qualify for these accounts.
Ans: Services that are available under this type of account include deposit and withdrawal of cash, receipt or credit of money through e-payment modes or by means of deposit at bank branches along with ATMs.
Ans: Yes, however, it is at the discretion of the banks. They can either provide the additional value-added services for free or charge reasonably with prior intimation to the customer. These charges must be transparent when a customer is opening an account.
Ans: Yes, banks provide BSBDA account holders with passbook facilities free of charge according to the instructions in the RBI circular dated October 16 2006.
Ans: If an individual officially requests for an ATM debit card when opening a BSBDA account, he/she will receive it. Banks do not insist any customer to accept ATM debit cards.
Before you go…
- Looking for instant 🚀 personal loans 24*7 anywhere, anytime? Get personal loans up to ₹20 lakh starting at 9.9% p.a. Install the Navi app now!!
- Or, maybe you’re looking to buy that house you’ve been eyeing 🏠 and you need a loan of up to ₹5 crore. Install the Navi app now and get instant in-principle approval right away! Interest rates starting at 8.74% p.a.
- How about an affordable health insurance policy👨⚕️ starting at a monthly premium of just ₹235? Install the Navi app now and get your policy in under 2 minutes.
- Instead, want to put your savings into action and kick-start your investment journey 💸 But don’t have time to do research. Invest now with Navi Nifty 50 Index Fund, sit back, and earn from the top 50 companies.
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
