What is the Rule of Zero-Balance Account in RBI?

There’s been a lot of talk about zero-balance accounts and their benefits, given that most companies choose to set up salary accounts under this system. At the same time, an easy zero-balance account opening online process and high flexibility also make them preferred choices for many customers. While on the topic of zero-balance accounts, it’s worth mentioning that our apex bank, the RBI (Reserve Bank of India) has laid down several guidelines for them. Let us look at them more closely in this article.

Key RBI Norms for Zero-Balance Accounts

The RBI has relaxed some of its guidelines for BSBD (basic savings bank deposit) accounts, another name for zero-balance accounts. Here are some of the key guidelines issued by the apex bank.

Services/Facilities:

  • Banks will provide value-added services free of charge for these accounts without needing a minimum balance.
  • They should provide checkbooks and other facilities, while allowing cash deposits at branches along with CDMs/ATMs without deposit value/number limits.
  • Banks can provide value-added services like checkbooks beyond minimum facilities that may/may not be chargeable, subject to proper disclosure.
  • Provision of these added services will make them non-BSBD accounts if the minimum services are given free of cost.

Withdrawals & Credit:

  • The RBI has directed banks to ensure that basic account holders get access to receipt/credit of funds via electronic channels or through deposits/collection of cheques drawn by Government departments/agencies.
  • The facilities include four ATM withdrawals in a month and an ATM/ATM-cum debit card.

Importantly, the RBI has stated that the BSBD (zero-balance) account will be taken as a normal banking service available to all. The apex bank has focused on higher financial inclusion, directing banks to offer these products as savings accounts that are free of charge and come with specific minimum facilities.

What Does the RBI Say Regarding Multiple Zero-Balance Accounts?

The RBI clearly states that zero-balance account holders will not be eligible to open other savings bank deposits in the same bank. This means that you can have either a savings/BSBD account with one bank, but not both of them.

If you already have a savings account with your bank but wish to open a zero-balance account, then the former should be closed. It has to be done within 30 days of opening the zero-balance account. Also, before you open a new account, you will have to provide a declaration to the bank that you do not have zero-balance accounts in other banks.

Let us now look at a few common queries of consumers and their answers as per the RBI directives.

Key Queries Regarding Zero-Balance Accounts & Their Answers

Based on the RBI’s latest directives, here are the answers to some common queries on BSBD or zero-balance accounts.

  1. Can I have other deposit accounts in a bank where he/she already has a BSBD account?

Yes, as per the RBI’s rules, you can have fixed or term deposit accounts in a bank where you already have a zero-balance account. You can also set recurring deposits and other types of accounts here.

  1. Are zero-balance accounts only for specific individuals, including those belonging to the weaker and poorer sections?

The RBI has clearly stated that the BSBD account should be taken as a normal banking service that is for all customers across bank branches.

  1. Are there any restrictions for opening these accounts like age, income, etc.?

No, the RBI has directed banks to avoid imposing restrictions such as the income or age criteria for those opening BSBDA accounts.

  1. What are the KYC regulations for these accounts?

They will be subject to the PML Act regulations and RBI guidelines on KYC (Know Your Customer)/AML (Anti-Money Laundering) for bank account opening. In case the BSBDA is opened based on the simplified KYC, the accounts will be taken as BSBDA-Small Account.

  1. What are the conditions for the BSBDA-Small Accounts?

Some of the conditions include:

  • Total credits should be a maximum of Rs. 1 lakh per year.
  • The maximum account balance should be Rs. 50,000 at any point in time.
  • The total debit through cash transfer/withdrawal should not cross Rs. 10,000 each month.
  • Foreign remittances cannot be sent to these accounts without the completion of KYC procedures.
  • Small accounts will have initial validity for 12 months, extendable if the customer furnishes proof of applying for the officially valid document.
  • These accounts may only be set up at CBS-linked branches or those branches that can track the fulfillment of the above conditions.
  1. What are the free services available for zero-balance accounts?

These include cash withdrawals and deposits along with credit/receipts via electronic channels or through a collection of cheques/deposits at ATMs and bank branches.

Conclusion

There are no minimum deposits required for opening zero-balance accounts, and you can enjoy various benefits as outlined above. Freedom from minimum balance restrictions and other advantages make these accounts excellent choices for almost anyone. The RBI’s rules and query answers will also help you make an informed decision.

The post What is the Rule of Zero-Balance Account in RBI? appeared first on Daily Excelsior.

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