A no-frills account is a basic savings account with the primary feature of not requiring maintenance of a minimum monthly average balance. However, a no-frills account may sometimes require maintaining a negligible minimum balance. This savings account was introduced by the Reserve Bank of India (RBI) in 2005 with the primary objective of promoting banking services to customers with lower incomes. With this account, as long as the KYC norms are followed, you can avail of all the major banking facilities like withdrawals, debit card payments, etc., at no additional costs.
The no-frills account was discontinued in 2012 and renamed the Basic Savings Bank Deposit Account (BSBDA), which is what the no-frills account is known as today.
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Features of a no-frills bank account
Now that we understand the conceptualisation and meaning of a no-frills account, let us take a closer look at some of its key features:
- A no-frills savings account can be opened and maintained without a minimum balance requirement, essentially at zero balance.
- With this account, you can avail of mobile and internet banking services, along with a debit card, free of cost. This promotes access to cash through ATMs present all across the country.
- This account can be operated by you individually or as a joint account.
- Quarterly account statements are provided to no-frills account holders over email
- Overall, the levied service charges are significantly lower compared to other forms of savings accounts.
Eligibility
You can open a no-frills account if you fulfil the following criteria:
- You must be an Indian citizen
- You must possess valid KYC documentation
- Minors over 10 years of age and pensioners can also open a no-frills account. Only NRIs and institutions are not permitted to have a no-frills account.
Also read: How to open a recurring deposit account
Documentation
The documentation required to open a no-frills account is as follows:
- KYC verification - The KYC process can be completed through documents like the PAN card.
- Address proof - Documents accepted as address proof include a ration card, Aadhaar card, voter ID, and PAN card, among others.
- Date of birth proof - You can use an Aadhaar card, ration card, or voter ID to prove your date of birth.
Benefits of no-frills accounts
Now, with clarity on the features and eligibility of a no-frills account, let us understand the advantages of these accounts. Here are some significant benefits of no-frills accounts:
1. Accessibility
With attractive features and relaxed eligibility criteria, no-frills accounts aim to bring more people into the fold of banking services to make it more inclusive.
2. Minimum balance
No-frills accounts require modest to zero minimum balance maintenance and can be an attractive option for many.
3. Unlimited deposits
There is no upper limit or an exact number of deposits you can make to your account.
4. Free debit card
All no-frills account holders can avail of an ATM card at no additional cost.
5. Specified withdrawals
No-frills accounts allow as many as four withdrawals in a month. This also includes the withdrawals made through debit cards.
6. No penalty for inactivity
No extra charges or penalties are levied even if you fail to operate the account for an extended period.
7. Nomination facility
Multiple banks offer nomination facilities in no-frills accounts to better serve the customers.
8. Internet banking
No-frills account holders can avail of the Internet banking facility. However, extra charges may be levied for the same.
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Also read: Post office PPF account
Important information regarding no-frills accounts
At this point, having a no-frills account may seem like an attractive option. It is understandable as you get numerous benefits at no additional costs. However, it is crucial to explore a few limitations of no-frills accounts as well. You can peruse the following pointers carefully, as it is information you must know before opening a no-frills account:
- Only one no-frills account is permitted per person.
- At one time, the maximum amount you can deposit in the account is Rs. 50,000.
- Annually, the total credit in your account cannot exceed Rs. 1 lakh.
- Without completing the KYC procedures, foreign currency deposits in no-frills accounts are not allowed.
- If you have a no-frills account at a bank, you cannot open another savings account at the same bank.
- In a month, the maximum withdrawal limit in a no-frills account is restricted to Rs. 10,000.
Summing up
No-frills accounts, presently known as Basic Savings Bank Deposit Accounts (BSBDA), are a vital tool promoting financial inclusion, aligning with the broader goal of making banking services accessible to all. These accounts, introduced by the Reserve Bank of India in 2005, primarily catered to people with modest incomes, offering banking services without the requirement of maintaining a minimum balance. Despite its simplicity, a no-frills account provides you with a range of benefits, including free debit cards, Internet banking services, and nominal service charges. However, it is essential to understand their limitations, such as restrictions on deposits, withdrawals, and foreign currency transactions. Nevertheless, with their focus on accessibility and inclusivity, no-frills accounts continue to play a crucial role in fostering financial empowerment and participation across diverse segments of society.
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