minimum balance of the savings account: This savings account does not require any minimum balance: find out if it suits you
All banks are mandated by the Reserve Bank of India (RBI) to provide such a facility for those looking to open a bank account. You can use the BSBDA account as a secondary account to manage your regular savings account more efficiently.
A BSBDA scores against a regular savings account primarily because it does not require maintaining a minimum balance. Failure to keep the required MAB in one’s regular savings account, which varies from bank to bank, could result in a penalty, while in BSBDA there is no such constraint regarding account balances.
Although the BSBDA is a zero balance savings account, it does come with restrictions. Therefore, before you go ahead and get a new BSBDA, here are some important points to consider.
What do you get in a BSBDA
You are not required to maintain a minimum average monthly balance and no minimum amount is required to open the account. The interest rate will be the same as that of the ordinary savings account. The RBI rules do not place restrictions on deposits or withdrawals from this type of account, nor do they have transaction limits.
As an account holder you will get the ATM-cum-debit card and passbook facility. All the usual features including deposit and withdrawal of cash at bank branches as well as ATMs, checkbook function (payable at par or in multiple cities) and online funds transfer will be available at the account. These facilities will be provided free of charge. BSBDA account holders can open fixed deposits and recurring deposits.
Banks may have their own eligibility criteria based on age and income. However, in accordance with RBI guidelines, banks are advised not to place restrictions such as age and income requirements on the individual when opening BSBDA.
Restrictions: Although there is no limit on the number of deposits that can be made in a month, the maximum number of withdrawals per month is limited to four. This includes ATM withdrawals and other modes such as RTGS, NEFT, clearing, branch cash withdrawal, online transfer, standing instructions, equivalent monthly payments (EMI), etc. However, it is up to the banks to decide whether they want to offer additional free or paid withdrawals.
BSBDA vs BSBDA-Small Account
To open a BSBDA, the central bank’s Know Your Customer (KYC) requirement is a must. But if the account is opened on the basis of a simplified KYC, it will be treated as a “BSBDA-Small Account”.
Here are the restrictions for the BSBDA-Small Account:
* The total of all credits in a fiscal year must not exceed Rs 1 lakh.
* The total of all withdrawals and transfers in one month must not exceed Rs 10,000.
* The balance at any time must not exceed Rs 50,000.
* Small accounts have an initial validity period of 12 months, which can then be extended for a further 12 months if the person provides proof of having requested an officially valid document for opening the account.
Can an existing regular savings account be converted?
If you have a savings account, there is no provision to convert it to BSBDA. However, you can open a new BSBDA. An individual is only authorized to open one BSBDA in a bank. If someone has a regular savings account, it must be closed within 30 days of opening the BSBDA, otherwise the bank will close it on its own after 30 days.
When opening the BSBDA, the account holder consents in writing that their existing non-BSBDA savings bank account (ordinary savings account) be closed 30 days after the opening of the BSBDA.
In these accounts, banks are allowed to offer additional features to account holders until they are free. However, if banks offer value-added services at a cost, RBI rules prevent them from calling themselves BSBDA. If your banker provides additional facilities, before opting for them, make sure that your account will remain a BSBDA to avoid confusion afterwards.
Who should opt for a BSBDA?
Failure to maintain the minimum balance may result in penalties. Certain categories of individuals such as students or pensioners or those who have just started their professional careers may find it difficult to maintain minimum balances. Such a zero balance savings account can come in handy for them, especially when they have limited transactions to complete in a month.
In addition, many people have 3-5 bank accounts and therefore need to maintain a minimum balance in each of them. Therefore, one can consider keeping a main account with unlimited transactions and in addition a BSBDA with limited transactions. By doing this, not only will you avoid penalties, but it will help streamline transactions.