Usually, a Savings Account requires you to maintain a minimum average balance, and if the balance is not maintained, the bank imposes a penalty. If you are attracted by the zero minimum balance feature, opening a Zero-Balance Account is ideal.

Unlike maintaining a minimum average balance, a Zero-Balance Savings Account does not have this condition, even when opening the account. The bank offers a Debit or ATM Card without asking for any extra fees. Deposit and withdrawal services are available for free, and so is the passbook facility.

The bank cannot charge account holders for non-operational account activations. You can deposit and withdraw money up to a monthly limit for free.

Other facilities

Banks may provide email statements, Demand Drafts, cheque collections, chequebooks, and other facilities free of cost or at a nominal charge. They generally offer the same interest rates on these accounts as they do on a Regular Savings Account. Note that these accounts are primarily intended to enhance financial inclusion among the economically weaker sections of society.

Who can open them?

Anyone can open a Zero-Balance Account using regular KYC documents. You can even request your bank to convert the existing Savings Account into a BSBD. Such accounts can also be opened with simple KYC procedures and be treated as “BSBDA Small Accounts”.

Suppose you have a Regular Savings Account. Then you need to give an undertaking to convert it to a BSBDA Account. The bank closes your Savings Account and opens a BSBDA Account for you. With the funds obtained from the BSBDA Account, the customer can open Fixed and Recurring Deposits with the bank.

Differences between Regular and BSBDA Accounts

The main difference between a Regular Savings Account and a BSBDA is that the latter does not require a minimum balance, while a Regular Account does. Here are other differences between them:

Balance

A BSBDA requires a maximum balance to be maintained, while a Regular Account has a minimum balance that varies between banks.

Interest rates

Both Regular and BSBDA Accounts earn the same interest rate. The higher the interest rate offered by the bank, the higher your returns and yield. When you open a Savings Account online, you can check and compare the interest rates offered by banks.

Withdrawals

BSBDA Accounts allow a certain number of free withdrawals per month. You need to pay a penalty after crossing the limitations. The same applies to Regular Accounts.

Opening

There is no initial deposit amount required for a Zero-Balance Savings Account. Meanwhile, Regular Accounts require you to deposit and maintain a fixed amount for operation when opening the account.

Conclusion

The RBI has made it mandatory for all banks to offer customers a Zero-Balance Account.