RBI decrees revamp of no-frills accounts

The Reserve Bank of India has told banks to replace the current practice of opening no-frills accounts for those who can’t afford the regular savings accounts with Basic Savings Bank Deposit Accounts.

In no-frills accounts, the banks were free to decide the facilities to be offered to the holders. Now, RBI has brought uniformity in the rules for such accounts.

In its annual policy statement this April, it had said would modify the guidelines on opening of basic banking no-frills accounts to do away with the stigma associated with the nomenclature, instead making the basic banking facilities available in a more uniform manner across the system.

RBI has said there should be no minimum balance requirement for these accounts. And, that all the services such as deposits and withdrawals at bank branches or ATMs, receipt/credit of money through electronic payment channels or deposits of cheques drawn on central or state government agencies or departments, should be made available to the holders of these accounts. They should get ATM or ATM-cum-debit card facilities. All these services should be made available without charge, it said in a circular.

While the account holder can deposit money any number of times in a month, the withdrawal limit Including through ATMs) has been capped at four.

All existing no-frills accounts should be converted to Basic Savings Bank Deposit Accounts, RBI said. However the holder of this account can’t hold any other savings account in that bank. If he or she does, it needs to be closed within 30 days of opening a Basic Savings Bank Deposit Account.