When you maintain more than one bank account meeting the minimum balance in all may be tough. Non-maintenance of the ’Minimum Account Balance’ (MAB) may result in a penalty.
You may open a Basic Savings Bank Deposit Account (BSBDA). Every bank is required to offer such accounts by the Reserve Bank of India (RBI). These accounts may be used to manage your primary savings account in an efficient manner.
One of the biggest advantages of BSBDA over a regular account is that the former has no minimum account requirement. However, a zero balance savings account has some limitations. Before you decide to open a BSBDA, you need to consider some important factors.
What BSBDA offers
You do not need any minimum amount at the time of opening this account. Furthermore, there is no MAB required for a BSBDA. In addition, the interest rate on BSBDA is the same as the regular savings account. RBI also does not levy on any restrictions on withdrawals and deposits as well as no transaction limits.
You will be provided with a debit card and a passbook. All features offered by regular savings account and online transfers are available with a BSBDA. You may also open recurring and fixed deposits through these accounts. Although banks may have income and age requirements, RBI does not impose any such restrictions.
There is no restriction on the number of deposits in the BSBDA. However, only four monthly withdrawals are allowed. Such withdrawals include ATM, online fund transfers, Equated Monthly Installments (EMIs), and branch withdrawals. However, some banks may offer additional free of cost withdrawals or you may have to pay some withdrawal charges.
Converting regular savings account to BSBDA
If you already own a regular savings account, you are not able to change it to a BSBDA. However, you may open a new account. It is important to note that you may open only a single BSBDA in one bank. If you hold a regular savings account, you need to close it within 30 days or the bank will automatically close it after this period. At the time of opening the BSBDA, your written consent is obtained to close your regular savings account.
According to the rules, banks may offer additional features to BSBDA holders if these are not chargeable. If such value-added services are chargeable, RBI mandates banks to not call these as BSBDAs. It is important you clearly understand whether the account will be BSBDA to avoid discrepancies in the future.
Who must opt for a BSBDA?
Non-maintenance of MAB attracts penalties. Pension earning senior citizens, first-time employees, and students may opt for this zero balance savings account because they may find it difficult to maintain the minimum balance. When you have limited transactions, a BSBDA is beneficial.