A zero balance account, also known as a no-frills account or a basic savings bank deposit (BSBD) account, is a type of savings account that can be opened with no minimum balance requirement. This means that the account holder is not required to maintain a certain minimum balance in the account at all times.
Zero balance accounts are typically designed for individuals who may not have a lot of money to deposit initially or who may have difficulty maintaining a minimum balance. They are also useful for people who do not have all the required documents for full KYC.
A zero balance account offers all basic banking services such as cash deposit and withdrawal, cheque book facility, account statement, and fund transfer through NEFT, RTGS and IMPS.
However, there may be restrictions on the amount of deposit and transactions that can be made, and the account holder may be required to fulfill full KYC norms at later stage.
It’s worth noting that Government of India has announced that starting from 1st January 2021, Aadhaar number will be the only document required for opening a bank account as it will be used as the sole identity proof.
It is best to check with the specific bank or financial institution for their specific policies regarding the zero balance account.
Zero balance account vs normal saving account
Here’s a table comparing the features of a zero balance account and a regular savings account in India:
| Features | Zero Balance Account | Regular Savings Account |
|---|---|---|
| Minimum Balance | No minimum balance requirement | Minimum balance requirement ranging from Rs. 1,000 to Rs. 10,000, depending on the bank and account type |
| Account Opening | Easier to open, requires fewer documents | May require more documents and may have more stringent eligibility criteria |
| Interest Rate | Similar to regular savings account, typically around 3-4% p.a. | Similar to zero balance account, typically around 3-4% p.a. |
| Debit Card | Basic debit card facility provided, with limited features and benefits | Debit card provided with additional features and benefits such as reward points, cashback, insurance, and more |
| Credit Card | Not typically offered with zero balance accounts | Credit card offered with eligibility criteria such as credit score, income, and repayment history |
| Additional Features | May have restrictions on transactions and additional services | May offer additional services such as net banking, mobile banking, SMS alerts, and more |
Zero balance account vs normal saving account
It’s worth noting that the features of zero
balance and regular savings accounts can vary between different banks and account types, and it’s important to compare the specific terms and conditions of each account before opening one.
Is Debit Card or Credit Card available with Zero Balance Account?
Yes, zero balance accounts typically provide a basic debit card facility that can be used for ATM withdrawals, point-of-sale transactions, and online purchases.
However, the features and benefits of the debit card may be limited compared to regular savings accounts, and the account holder may be required to fulfill full KYC norms at a later stage to avail additional facilities such as a credit card.
It is best to check with the specific bank or financial institution for their specific policies regarding the debit and credit cards provided with zero balance accounts.
Benefits of zero balance account
Some benefits of zero balance accounts are:
- No minimum balance requirement: One of the primary benefits of a zero balance account is that it does not require the account holder to maintain a minimum balance. This is helpful for individuals who may not have a lot of money to deposit initially or who may have difficulty maintaining a minimum balance.
- Easy to open: Zero balance accounts are typically easier to open compared to regular savings accounts, as they require fewer documents and no minimum balance.
- Basic banking services: Zero balance accounts offer all basic banking services such as cash deposit and withdrawal, cheque book facility, account statement, and fund transfer through NEFT, RTGS and IMPS.
- Financial inclusion: Zero balance accounts are helpful for promoting financial inclusion, as they allow individuals who do not have a lot of money or all the required documents to open a bank account and access basic banking services.
- No penalty for non-maintenance of balance: Since there is no minimum balance requirement, the account holder will not be penalized for not maintaining a minimum balance.
It’s worth noting that there may be restrictions on the amount of deposit and transactions that can be made, and the account holder may be required to fulfill full KYC norms at later stage.
Conclusion
In conclusion, opening a bank account in India typically requires submitting various forms of identification and address proof, such as an Aadhaar Card, PAN Card, Passport, Voter ID card, etc.
However, Government of India has announced that starting from 1st January 2021, Aadhaar number will be the only document required for opening a bank account as it will be used as the sole identity proof.
For individuals who may not have all the required documents or may not be able to maintain a minimum balance, a zero balance account is a good option.
A zero balance account does not require the account holder to maintain a minimum balance, and it offers basic banking services such as cash deposit and withdrawal, cheque book facility, account statement, and fund transfer through NEFT, RTGS and IMPS.
It is best to check with the specific bank or financial institution for their specific policies regarding the opening of bank accounts and zero balance accounts.