Zero-balance account
Also called: no-frills account, basic savings account, BSBDA, Basic Savings Bank Deposit Account · Topic: Rural Credit, Microfinance and Financial Inclusion · NCERT: Class 7, Ch 8 "Banks and the Magic of Finance"
Meaning
A zero-balance account is a bank savings account that has no minimum balance and no fees. Its formal name is the Basic Savings Bank Deposit (BSBD) account. Banks usually ask for a minimum balance, which keeps poor people out. Removing that rule brings them into the formal banking system, which is the aim of financial inclusion. India began with no-frills accounts in 2005, and this became a mass drive under the Pradhan Mantri Jan Dhan Yojana (PMJDY) from 28 August 2014.
Example
A landless labourer opens a Jan Dhan account without depositing any money. She gets a RuPay debit card with accident cover of ₹2 lakh (for accounts opened after August 2018) and can get an overdraft of up to ₹10,000. Her wages and pension can come straight into the account through direct benefit transfer (DBT), the system that pays government money directly into bank accounts.
Don't confuse with
- Dormant account: "Zero-balance" describes the rules for opening and keeping the account. A dormant account is one that is not being used. Many zero-balance accounts become dormant, and this is a known gap in financial inclusion.