With an aim of increasing financial inclusion in the country, basic savings bank deposit accounts (BSBDAs) or no-frills accounts were introduced without any need to maintain minimum or monthly average balance. RBI fixed the number of withdrawals to four a month. However, the account holders are now facing penalty for exceeding the limit of four withdrawals in a month as many banks are using the fifth debit as a trigger to change a BSBDA into a regular savings account, PTI said citing an IIT-Bombay research report. Nearly 54 crore BSBDAs have been opened through branches and business correspondents up till now. Out of this, over half have been opened under Narendra Modi’s Pradhan Mantri Jan Dhan Yojana (PMJDY).
Unlike regular savings accounts, BSBDA are no-frills accounts which don’t offer various services and hence do not levy a fees. Such accounts usually also do not have a minimum balance requirement. Even though the account holder cannot withdraw more than four times in a month, unlimited number of deposits can be made in these accounts.
These design irregularities are pushing the bankers to overcharge such customers breaching central bank’s regulations, the report — titled ‘Can BSBDA depositors have long innings? Be aware and remain vigilant’ — said.
“The moment a fifth debit transaction is done by the customer in a month, these banks without explicit and voluntary consent of customers are unilaterally converting the BSBDA into a regular savings account, requiring high minimum balance and associated service charges,” the report further said.
The report said that the central bank should remove the restrictions on number of digital transactions in a month by such account holders which goes with the government’s policy to promote cashless transactions.
PMJDY is a government scheme that aims to expand and make affordable access to financial services such as bank accounts, remittances, credit, insurance and pensions.