RBI adds host of services to basic savings accounts

Reserve Bank of India Extends Free Services for Zero-Balance Savings Accounts

The Reserve Bank of India has announced a major expansion of services for zero-balance zero-fee basic savings bank deposit accounts, directing lenders to treat the product as a normal savings service rather than a stripped-down alternative.

• New Rules: Banks have been instructed to convert existing accounts into BSBD accounts if customers request it, and every BSBD account must offer cash deposits, receipt of funds through electronic channels or cheque collection, and an unlimited number of deposits each month.
• Free Services: Customers are entitled to an ATM or ATM-cum-debit card without annual charges, a cheque book with at least 25 leaves a year, free internet and mobile banking, and a free passbook or monthly statement, including a continuation passbook at no cost.
• Withdrawal Limit: At least four free withdrawals a month will be permitted, but digital payments — including PoS transactions, NEFT, RTGS, UPI and IMPS — will not be counted toward the withdrawal limit.

The Reserve Bank of India has introduced the zero-balance savings bank deposit accounts in 2012, which became widespread after public sector banks opened these accounts in large numbers in campaign mode. Now, under the new circular, existing customers can switch their accounts to a BSBD account.

• Conversion Process: Existing customers can request their bank to convert their savings account to a BSBD account through physical or digital channels, with no need for an initial deposit.
• Additional Features: Banks may offer additional chargeable features, but without enforcing a minimum-balance requirement, and customers can opt in at their discretion.

The new rules have been welcomed by banking sources, who note that private sector banks held only 2% of Jan Dhan Accounts, which were in the nature of basic banking accounts. The Reserve Bank of India's move is seen as a major step towards increasing access to basic banking services for all citizens.