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.
Here are the features of no-frills accounts:
Anyone who fulfils the following eligibility criteria can open a no-frills account:
Here are the documents that are required for opening a no-frills bank 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.
Here are some advantages of a no-frills savings 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).
Here are some of the things that should be kept in mind before opening a no frills account:
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.
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.
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.
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