What is a Zero Balance Account?
Savings Accounts
Banks offer savings account, a type of deposit where you can deposit your money and savings. In most cases, savings account come with a minimum average requirement that you need to maintain to avoid paying maintenance fee. Depending on the bank the minimum balance can be calculated on a monthly or quarterly basis.
Also, you receive interest on your deposit.
What is Zero Balance Bank Savings Account?
Zero balance account is a kind of savings account with zero charges on non-maintenance of balance. This means that the account gives you the flexibility to spend without worrying about maintaining a minimum average balance.
Types of zero balance savings accounts
There are three main types of zero balance savings account. Basic Savings Bank Deposit (BSBDA), Basic Savings Bank Deposit (BSBDA) Small Account and accounts opened online through Aadhaar OTP authentication.
Online Zero Balance Savings Accounts
Online zero balance accounts are savings account that you can open instantly online through Aadhaar OTP authentication. However, not all online savings accounts are zero balance accounts.
Indian citizens above 18 years of age can open the account. Generally, these accounts are meant for individual use and joint accounts may not be available.
You can download the bank’s mobile banking app or fill the online account opening form to open the account. PAN, Aadhaar card and Aadhaar linked mobile number are needed to open the account. The account is opened after successful verification of the Aadhaar OTP. These account are e-KYC accounts and are valid for 12 months by visiting the bank branch or meeting with a bank official with the required KYC documents. Few banks also provide with the facility to complete your KYC process through the Video KYC process.
Basic Savings Bank Deposit (BSBDA)
Having a bank account is the sign of financial inclusion. However, in India, many people don’t have a bank account. So, Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched in 2014 to ensure financial services to everyone. Basic Savings Bank Deposit (BSBDA) is the bank account opened under PMJDY.
People who have other bank accounts are not eligible to open BSBDA.
Individuals above 18 years with a valid photo id proof and address proof can open the account. Accounts opened through valid KYC documents don’t have any restrictions.
BSBDA Small Account:
Individuals who don’t have a valid Photo ID proof and address proof as per the bank’s acceptable list of documents can open a BSBDA Small Account by submitting a self-attested photograph and signature/thumbprint.
Customers need to provide KYC documents within 12 months from the date of account opening to continue using the account. If unable to furnish documents within 12 months, customers need to provide evidence of application of the KYC documents. In this scenario, the account can be extended for another 12 months.
However, as the account is opened without any KYC documents, several restrictions are put in balance. The total balance in the account should not exceed Rs. 50,000 at any point of time. Also, the total credits in all the account should not exceed Rs. 1 lakh at any point of time and the total withdrawals and transfers in the account should not exceed Rs. 10,000 in a month.
Features of Zero Balance Accounts
Zero Balance Saving Account has different features. Here are some of the features.
No minimum average balance: Many depositors may not be able to maintain an average balance. Zero balance savings account solves this problem. These zero balance accounts don’t have any minimum average balance requirement so you can utilize your money without thinking about maintaining the minimum average balance.
No initial deposit: In case of a regular savings account, banks charge an initial deposit amount that customers need to pay on account opening. However, zero balance accounts don’t have any initial deposit amount.
Earn Interest: Account holders receive interest on their zero balance accounts just like a regular savings account. The interest earned from the deposits is credited at the end of every quarter.
Passbook: Customers receive passbook to check their account activity.
Debit Card: Debit card is also available for zero balance account holders. Basic savings account holders get a free RuPay Debit Card that they can use to carry out transactions within India.
However, for online savings zero balance account customers, the issuance of debit card will depend on the bank.
Cheque book: Zero balance customers can avail cheque book facility. A cheque is considered as a valid proof of bank account for different uses such as investing in stocks and mutual funds among others.
Internet Banking: Internet banking facility is another feature of the account. Through internet banking, customers can transfer money, pay bills, shop online instantly without spending any cash.
Other banking facilities: Customers who have completed the KYC process can avail different banking products such as Fixed Deposit (FD), Recurring Deposit (RD) that can help you save money for the future.
Conclusion: Zero balance savings account is like a regular savings without any minimum average requirement. Basic Savings Bank Deposit Account can be an ideal financial tool for customers to enter the formal banking system and gain various financial assistance.
Individuals above 18 years of age with a PAN card and Aadhaar card can open an online zero balance account like Kotak 811 from the comforts of their home without any paperwork.
