Basic savings deposit account Vs. No-frills account: Is there a difference?

Understand the difference between basic savings deposit account and No-frills account
Basic savings deposit account Vs. No-frills account
3 min

A regular savings bank account requires you to maintain a certain minimum balance at all times. Failing to do so attracts a penalty charge from the bank. This standard minimum balance requirement has often deterred low-income individuals from opening bank accounts. The RBI introduced No-Frills Accounts in 2005 to address this issue. These zero balance accounts were introduced to extend banking services to individuals from economically weaker sections of society.

When discussing savings accounts vs. no-frills accounts, it is essential to understand that the former has a minimum balance requirement, while the latter comes with a maximum balance mandate. No-frills account holders were eligible for certain free banking services, including ATM-cum-debit cards, a passbook facility, and free quarterly account statements. Moreover, the fee structure for regular savings accounts vs. no-frills accounts was also different, with the latter benefiting from a substantially lower service charge structure.

In 2012, the RBI renamed the No-Frills Account to Basic Savings Deposit Account in an attempt to dispel the stigma associated with the title. The RBI circular also ended the basic savings account vs. no frill account debate by declaring the two essentially identical. Banks were mandated to convert all operational no-frills accounts to Basic Savings Bank Deposit Accounts, and all fresh accounts be opened under the BSBDA tag.

Also read: Fixed Deposit vs. Savings Account

If you are looking for a safe investment option, you can consider fixed deposit. They offer guaranteed returns and a fixed interest rate throughout your investment tenure.

Details on opening a Basic Savings Bank Deposit Account

Like the various national savings schemes like NSC and SSY, the BSBDA is designed to help mobile savings in the long run without the burden of minimum balance worries. While the RBI has resolved the basic savings account vs. no frills account debate, it is still essential to understand a few things about BSBDA before opening one. We have curated a comprehensive guide to BSBDAs below:

  • You can only open one BSBDA in one bank.
  • If you already have a savings account in the bank, you are required to close this account within 30 days of opening a BSBDA.
  • You can also submit an undertaking to the bank to convert your regular savings account into a BSBDA.
  • If you want to open a different type of savings account in the bank, you must first close the BSBDA.
  • You can open fixed deposit and recurring deposit accounts in the same bank.
  • There are no age or income limitations on opening a BSBDA.
  • According to the RBI, BSBDAs are subject to the KYC norms prescribed under the PML Act and Rules and RBI instructions on Know Your Customer (KYC) / Anti-Money Laundering (AML).
  • You can open a BSBDA on the basis of Simplified KYC norms, requiring basic KYC documents only. In such cases, the BSBDA would be treated as a small account, making it subject to all the restrictions applicable to small accounts.
  • BSBDAs qualify for a range of free-of-cost services, including the deposit and withdrawal of cash, credit/receipt of money through electronic payment systems or by deposit, or via collection of cheques at bank branches. Banks are also mandated to offer free ATM debit cards without annual charges for Basic Savings Bank Deposit Account Holders.
  • Banks can also offer additional services like chequebooks, email statements, DDs, and internet banking facilities free of cost or at nominal charges.

Basic Savings Bank Deposit Accounts earn the same interest as regular savings accounts.

You can consider investing Bajaj Finance Fixed Deposit. With a top-tier AAA rating from financial agencies like CRISIL and ICRA, they offer one of the highest returns, up to 8.85% p.a.

Conditions for a Basic Savings Bank Deposit Account

In the basic savings account vs. no-frills account debate, understanding the conditions applicable to BSBDAs is essential. Since BSBDAs are essentially the same as no-frills accounts, they operate under the following conditions:

  • A Basic Savings Bank Deposit Account Holder cannot open any other type of savings account in the same bank.
  • Aggregate of all credits in a year to a Basic Savings Bank Deposit Account cannot exceed Rs. 1 lakh.
  • Balance in the account should not exceed Rs. 50,000 at any point in time.
  • There are no initial deposit requirements or minimum balance requirements for Basic Savings Bank Deposit Accounts.
  • Foreign remittances cannot be deposited into the account unless regular KYC procedures are completed.
  • Account holders can make up to four withdrawals from the BSBDA in a month. All four withdrawals are completely free of charge.
  • The aggregate debit, by way of cash or transfers, cannot exceed Rs. 10,000 in a month.
  • Each BSBDA-Small Account is valid for 12 months, which can be extended to another 12 months if you provide proof that you have applied for an Officially Valid Document.
  • Small Accounts can only be opened at CBS-linked (core banking solution) bank branches.

If the account fails to meet these conditions, the bank reserves the right to convert it back into a regular savings bank account.


With RBI’s fresh directives in 2012, the debate between a basic savings account vs. no-frills accounts clearly stands settled. No-frills accounts no longer exist since they have been rebranded as BSBDAs. Apart from the free services prescribed by the RBI, banks are free to offer other value-added services either free of charge or on a reasonable pricing basis. Thus, facilities offered under BSBDAs differ from bank to bank, and you should review the services offered before opening a BSBDA account.

While a BSBDA can help you save funds without the burden of a minimum balance, FDs can help in long-term financial planning. Parking your funds in FDs offers the dual benefits of guaranteed returns and capital protection. High-interest paying FDs, like the Bajaj Finance FD, offer up to 8.85% p.a. interest with easy monthly income options, flexible tenures, and even loans against the FD.

Calculate your expected investment returns with the help of our investment calculators

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As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.