Have A Regular Savings Account? Opening This RBI-Backed Account May Require You To Close Your Existing Account

If you are thinking of opening a basic savings bank deposit account (BSBDA), you should be aware of the fact that it may impact your existing savings account. Under the Reserve Bank of India (RBI) rules, an individual who opens a BSBDA in a bank cannot continue to hold another savings account in the same bank and may have to close the existing account within 30 days.

The provision is part of the framework governing BSBDA, a zero-balance account offered by banks to provide basic banking services. RBI guidelines allow an individual to hold only one BSBDA in a bank. If the customer already maintains a regular savings account with that bank, it must be closed within 30 days of opening the BSBDA.

However, the restriction does not apply to other deposit products. Customers can continue to hold fixed deposits, recurring deposits and similar accounts in the same bank.

Key Conditions For Account Holders

BSBDA is available to all customers and banks are not allowed to impose conditions based on age, income or the amount of money a person holds. The account can also be opened without making any initial deposit.

The account replaced the earlier “no-frills” account system and was introduced to improve access to banking services.

Another lesser-known rule is that customers are not required to accept an ATM debit card if they do not want one. Banks may offer the card while opening the account, but it should be issued only when requested by the customer.

Free Services Available

RBI guidelines require banks to provide several services free of charge to BSBDA customers. These include cash deposits and withdrawals, receipt of funds through electronic payment channels, along with cheque collection and passbooks facilities.

Banks must also issue ATM debit cards free of charge and cannot levy annual fees on such cards. This distinguishes the account from some banking products that may carry card-related charges.

Customers are entitled to at least four free withdrawals in a month through ATMs, bank branches and other permitted channels. RBI has clarified that balance enquiries at ATMs will not be counted within this withdrawal limit.

Additional Facilities May Change Account Status

Banks are permitted to offer services beyond the minimum facilities prescribed for BSBDA accounts. These may include cheque book facilities and other value-added services. However, additional facilities are offered against charges or linked to minimum balance requirements. In such a case, the account may no longer qualify as BSBDA. Customers considering extra services may, therefore, need to check how such changes could impact the status of their account.

Customers who currently hold a savings account will also be able to switch to a BSBDA with written consent to the terms and conditions of a BSBDA account.