Banks are vital financial institutions of an economy. They function by borrowing money from depositors offering them a particular annual rate of interest and lending the money to the borrowers, at a higher rate of interest, for their businesses, thus enabling the economy to grow. There are mainly four types of bank accounts, namely, savings account, current account, recurring deposit account, and fixed deposit account.
The banking system needs to penetrate to the lower levels of the society as well as the rural areas for them to have access to such facilities. This would help in enabling the growth of the economy. However, strings associated with bank accounts such as minimum balance and other charges prevent it from happening smoothly.
This was until the Reserve Bank of India introduced a “no-frills Account” which aims at providing all necessary banking facilities to consumers at minimum or nil charges. No-frills bank accounts require zero or very low minimum balance and other banking facilities such as withdrawals and ATM and Debit card facilities at zero charges to enable universal access to banking facilities. No-frills bank accounts are now known as Basic Saving Bank Deposit Accounts.
Advantages of No Frills Account/Basic Saving Bank Deposit Accounts
- Zero or Meagre minimum balance is required for such bank accounts.
- This service is considered as a regular banking service and is available to all.
- It includes deposit and withdrawal services at bank branches or ATMs.
- There is no limit on the number of deposits.
- An account holder can withdraw money maximum of four times a month, including withdrawal from ATMs.
- Facilities of ATM cum Debit cards are available free of cost.
- No charges are levied if the bank account remains non-operational or inactive for an extended period.
- Some banks also provide nomination facilities.
- Some banks may also provide other facilities such as Internet Banking Services, but the banks have authority over the charges.
Process of opening a No Frills Account/Basic Saving Bank Deposit Account
- Eligibility- Citizens of India, having valid KYC documents are eligible. NRIs, organizations, and institutions do not qualify for such accounts.
- Documents required- Address proof and proof of Date of Birth such as Aadhaar Card, Ration Card, Voter Id card, and proof of KYC such as PAN card is required for opening such a bank account.
- One can get a Basic Saving Bank Deposit Account opened at any preferable bank or branch as long as he has proper documents.
The availability of banking services across all sections of society is essential. This helps in the development as well as the growth of the economy. No-frills accounts or Basic Saving Bank Deposit Accounts help provide access to banking facilities to the lower sections of the society. Such accounts offer basic banking facilities such as deposits and withdrawals, while simultaneously removing the need to maintain a minimum account balance.