On Friday, the 10th of August
2012, the Reserve Bank of India asked banks to drop the 'no-frills' tag from the basic
saving accounts and convert all existing “no-frills” accounts into basic
savings accounts.
What is a “no-frills” account?
The RBI had
introduced “no-frills” accounts in 2005 to provide basic banking facilities to the
poor and promote financial inclusion. These accounts could be maintained with
very low minimum balance or zero balance.
Why has this step been taken?
This step has been taken to
do away with the stigma associated with the nomenclature “no-frills” account
and to make basic banking facilities available in a more uniform manner across the
banking system. A circular has been issued to commercial banks in this regard.
Further directions given by the RBI:
The RBI has also asked
the banks to provide the following facilities in the basic banking accounts:
- Zero balance facility
- ATM-cum-debit cards without any extra charge
- No limit on the number of deposits that can be made in a month. However, Basic Savings Bank Deposit Account holders will be allowed a maximum of four withdrawals in a month, including through ATMs.
- No charge will be levied for non-operation/activation of in-operative “Basic Savings Bank Deposit Account”
