The Reserve Bank of India (RBI) has proposed sweeping reforms to the framework governing Basic Savings Bank Deposit (BSBD) accounts — also known as zero-balance or no-frills accounts.
A draft circular released by the central bank outlines fresh responsibilities for banks and expanded rights for account holders, aiming to modernise BSBD operations in line with India’s growing digital economy.
What Are BSBD Accounts?
BSBD accounts are designed to serve individuals who cannot afford to maintain a minimum balance in traditional savings accounts. These accounts form the foundation of India’s financial inclusion drive, offering basic banking services with minimal charges.
Every Pradhan Mantri Jan Dhan Yojana (PMJDY) account is categorised as a BSBD account. As of now, over 566 million such accounts have been opened across the country, collectively holding deposits of more than ₹2.67 trillion.
The accounts enable beneficiaries to receive government subsidies, make deposits, withdraw funds, and conduct basic transactions without the burden of maintaining a minimum balance.
Key Highlights of the Proposed Reforms
The RBI has noted that while BSBD accounts have played a crucial role in expanding access, their structure needs to evolve to reflect rapid digital adoption and customer expectations. The proposed changes aim to improve service quality, transparency, and accessibility.
1. Free Core Banking Facilities
Banks will be required to provide BSBD accounts with no minimum balance requirement. Every account holder must have access to:
- Unlimited cash deposits at branches, ATMs, or through business correspondents
- Free ATM or debit cards without annual charges
- At least 25 free cheque leaves every year
- Free passbooks or monthly digital statements
- Internet and mobile banking facilities at no cost
2. Withdrawal and Digital Transaction Rules
- A minimum of four free cash withdrawals per month (including at branches and ATMs) will be mandatory.
- All digital transactions—via UPI, NEFT, RTGS, IMPS, and PoS—will be completely free and unlimited, encouraging cashless transactions.
3. Option to Convert Regular Accounts
Existing customers with standard savings accounts can request conversion to BSBD accounts, making it easier for individuals to transition to zero-balance facilities if needed.
4. Promotion and Awareness by Banks
The RBI has directed banks to actively promote BSBD accounts and clearly explain their benefits to customers. When onboarding new clients, banks must explicitly state the differences between BSBD accounts and regular savings products to ensure informed decision-making.
5. Restrictions to Prevent Duplication
To ensure the benefit reaches the intended section of society, the following restrictions will apply:
- Each individual can hold only one BSBD account across all banks.
- A customer cannot maintain a separate savings account in the same bank once a BSBD account is opened.
- However, term deposits such as fixed deposits may still be opened.
Banks will be required to obtain a self-declaration from applicants confirming compliance with these norms.
6. Additional Services with Transparency
Banks may offer extra facilities—such as insurance coverage or premium debit cards—but only if:
- The pricing is transparent, and
- The services are provided in a non-discriminatory and non-discretionary manner.
Focus on Stronger Grievance Redressal
In parallel with the proposed overhaul, the RBI has also announced plans to strengthen the grievance redressal framework for BSBD customers.
- The Internal Ombudsman mechanism within banks will be reinforced to ensure faster and fairer handling of customer complaints.
- For the first time, rural cooperative banks will be brought under the RBI Ombudsman Scheme, allowing customers in remote areas to escalate unresolved issues directly to the central bank’s grievance platform.
A Step Towards Inclusive, Digital Banking
The RBI’s proposal signals a clear intent to balance simplicity with digital empowerment. By mandating free digital transactions and expanding customer protections, the central bank aims to make BSBD accounts a robust gateway for millions of first-time users entering India’s formal banking system.
The draft circular is open for public comments, following which the RBI is expected to finalise and issue the revised BSBD guidelines.
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