Back in 2005, the Reserve Bank of India (RBI) has introduced something called as a ‘No Frills account’ with a good intention of providing banking services to the common man. Under No frills account, one can operate a savings account without the need to maintain any minimum amount unlike normal savings accounts. Unfortunately, as time progressed, this account has been (unofficially) limited to the elite customers (those who own a 4 wheeler or those who have high net worth) by the banks.
In order to correct that, the RBI has recently stepped in and introduced certain guidelines, which, all the scheduled commercial banks have to follow. As a base, the central bank has advised the banks’ to discontinue the usage of the word ‘No frills’ and recommended the name ‘Basic Savings account’. Some important points are as follows:
- ATM cum Debit card must be provided without any fee
- The account can be operated with zero balance
- Money deposits can be made any number of times in a month (including unlimited number of electronic transfers)
- Upto 4 withdrawals can be made in a month (this including ATM withdrawals)
- If the account stagnates (in case it is inactive for certain number of months), banks’ should re-activate it without any additional fee
- Existing No frills accounts must be converted (adding these benefits) into Basic Savings account.
Note: Some banks’ provide additional benefits over these minimum requirements, such as auto-sweep facility.