Is a zero balance savings account a good choice?

A zero balance savings account takes away the stress of maintaining a minimum balance in the account every month, and has some other benefits too.

In today’s times, it is imperative that everybody have a savings bank account. Whatever one’s station in life, whatever one’s income and spending habits, one must have a safe place to deposit one’s money and even withdraw it when necessary.

However, while many people with access to a bank do have a savings bank account, it often comes with the added stress of maintaining a minimum balance per month. Most banks specify a minimum balance of Rs 5,000, while some premium banks may insist on a minimum balance of Rs 25,000 or more. If the account balance goes below the specified amount, the bank levies a penalty on the same.

A new concept in savings bank accounts – the zero balance saving account – is hence, finding favour among people. As the name suggests, the zero balance saving account is encumbered by the minimum balance condition. The account holder can operate this account in the usual ways – deposit or withdraw money, transact using a bank debit card, make cheque transactions, etc.

As per a mandate from the RBI, all banks now offer a Basic Savings Bank Deposit Account (BSBDA). Several banks are slowly offering the zero balance condition to their usual savings bank products as well.

Additionally, those with salary accounts and eligible for the Pradhan Mantri Jan Dhan Yojana (PMJDY) can open zero balance savings accounts. The PMJDY is a financial inclusion scheme to make banking services accessible to all Indians. The account holder gets a debit card, cheque book, access to Internet banking and a passbook. However, the cheque book is free for certain number of leaves every year, and subsequent requests for cheque books are charged. Also, there is a charge on numbers of transactions conducted after a stipulated number.

The procedure for opening this account is the same as other accounts – one must fill in the bank’s application form and submit KYC documents (ID proof and address proof).

This type of account is useful for those who mainly like to use their savings accounts for deposits and who do not actively bank every day, such as senior citizens. However, keeping the account unused for a long time can render it inactive. The bank must authorise the account to become active again on the customer filling out the relevant documents for the same.