What is basic a savings bank account? How it is different from a regular savings account?

Normally a savings bank account is required to maintain a certain minimum average balance and if the same is not maintained the bank imposes a penalty. But if a zero minimum balance sounds attractive to you, Basic Savings Bank Deposit Account (BSBDA) is right for you. Contrary to maintaining any minimum average balance, BSBDA requires a maximum account balance. The upper limit to the balance that can be maintained in this account is Rs. 50,000 i.e one can not maintain an average balance of more than ₹50,000 in the account.

What is BSBDA?

The Basic Savings Bank Deposit Account or BSBDA is a savings account that does not have a minimum balance even at the time of opening the account. You will get an ATM-cum-debit card without any fees, not even the annual maintenance fee. Deposit and withdrawal services are free of cost, and so is the passbook facility. Also, the bank cannot levy charges for non-operation or activation of an inoperative account. The bank allows a certain number of deposits and withdrawals in the month that are free of cost.

Banks may provide other facilities such as a chequebook, email statements, Demand Drafts, cheque collection and other facilities either free of cost or at a nominal charge. Banks offer the same rate of interest on these accounts as they do for a Regular Savings Account.

It is important to note that these accounts are primarily aimed towards enhancing financial inclusion among the economically weaker sections of society. The earlier no-frills accounts also come under BSBD accounts.

Who can open BSBDA account?

Anyone can open BSBDA account using regular KYC (know-your-customer) documents. Even, you can request your bank to convert your existing savings bank account into a BSBD.

How to open BSBDA Account?

A BSBDA account can be opened using regular KYC (know-your-customer) documents and would be subject to provisions of PML Act and Rules and RBI instructions on Anti-Money Laundering (AML) for opening of bank accounts. BSBDA can also be opened with simplified KYC norms. However, if BSBDA is opened based on Simplified KYC, the accounts would additionally be treated as “BSBDA-Small  Account”.

In case a customer has a regular Savings Account, he will have to give an undertaking if he wants to convert it to a BSBDA Account. The regular Savings Account will get shut and a BSBDA Account will be opened. The customer can, however, open fixed and recurring deposits with the bank with the funds from the BSBDA Account.

Restrictions on a BSBDA account

Since the BSBDA is a no-frills zero balance account, there are a few conditions imposed on it. Here are the restrictions: 

• Total credits in such accounts should not exceed one lakh rupees in a year.
• The maximum balance in the account should not exceed fifty thousand rupees at any time
• Remittances from abroad cannot be credited to Small Accounts without completing normal KYC formalities
• The total of debits by way of cash withdrawals and transfers will not exceed ten thousand rupees in a month
• Small accounts are valid for 12 months initially which may be extended by another 12 months if the person provides proof of having applied for an Officially Valid Document.
• Small Accounts can only be opened at CBS-linked branches of banks or at such branches where it is possible to manually monitor the fulfilment of the conditions.
• A maximum of 4 withdrawals in a particular month
• In case the account doesn’t satisfy these conditions, the bank can convert it to a Regular Savings Account as well.
• An account holder cannot have a regular Savings Account and a BSBDA Account in the same bank. The bank can convert a regular Savings Account to a BSBDA Account if the account holder follows the conditions and rules.