Traditional savings accounts typically come with account opening and maintenance charges that are unaffordable for many. Some people choose to stay unbanked to avoid the overly complicated application procedure, while some do not have access to the documents needed to open an account. A sizable portion of the unbanked population worries about bank fraud and poor management, which could cost them their hard-earned money.
As a result, 190 million Indians remain unbanked even in 2023 despite the economic growth India has achieved lately. Zero balance accounts (ZBAs) kick in to remedy the situation. The very concept of ZBA is premised on financial inclusivity, bringing the unbanked into the banking fold. They are much like traditional savings accounts
but minus their shortcomings. Simply put, they are a bit more flexible, cost-effective, and convenient to open and maintain.
Let’s dive deep into the concept of Zero balance account opening online and unravel what it is, how it works to your advantage, and why it is hailed as the game changer.
Zero Balance Account Spelled Out
In traditional saving accounts, the initial deposit and minimum balance requirements are applicable. That means you first require making initial deposits to open these accounts and then maintain a certain balance to avoid penalties. You could lose up to 6% of the shortfall as penalties once your balance falls below the prescribed minimum balance limit.
With “zero balance” right in the name, zero-balance accounts are openable and maintainable with a zero balance. Also, no account opening charges apply whatsoever. That means you can open a bank account online free of cost and maintain it without ever attracting penalties for failing to meet the minimum balance requirements. It further takes the pain out of banking with an easy application process, minimal documentation, and guaranteed safety.
With all bases covered, ZBAs come across as an effective way to bring unbanked people under the umbrella of formal banking services. They work well for students, low-income individuals, rural folks, senior citizens, women, or anyone who prefers a no-frill saving account. As a side note, the Reserve Bank of India (RBI) refers to it as a Basic Savings Bank Deposit (BSBD) account.
How a Zero Balance Account Works to Your Advantage?
ZBAs can be held by an individual or jointly with one or more partners. The exact number of people who can share a zero balance account may vary from bank to bank. Ideally, the account holder should maintain some funds in the ZBA to earn interest income. But even with a nil balance, the account stays functional and free of penalties. With or without funds, you continue to enjoy the benefits associated with a standard saving account. Here’s what to expect.
- Easy to Open:
Zero balance account opening online or offline is a breeze. Just follow a few steps, and your account is in place and ready to be used. Plus, the KYC process is easy with little documentation. An Aadhaar Card, PAN Card, and a few passport-sized photographs will do the job for you. Kotak 811 even provides video KYC facility for greater convenience.
Better still, you can skip the KYC ordeal altogether with a non-KYC zero balance account. If the bank considers you a low-risk customer, you can open a non-KYC zero balance account with deposits below INR 1 Lakh. Just provide self-attested photographs and signatures, and you are sorted. Mind you, ZBAs are tailored for financial inclusivity. With an easy application process and minimal paperwork, they deliver basic banking services to those lacking documents.
- Safety and Growth:
A ZBA is as safe as any regular savings account. Some ZBAs are backed by both the Reserve Bank of India and the Government of India and are constantly monitored by the bank. Also, since they are linked to your Aadhaar card, the risk of identity theft is pushed out of the equation. Your money in ZBA doesn’t just stay safe but also grows over time. Expect up to 4*% annual interest income with Kotak811, the first and leading zero balance account in India.
Think of ZBAs as a no-frill version of a regular saving account. So, they rival traditional accounts in terms of versatility. You can use them to access all basic banking functions afforded by any standard account. From deposits and withdrawals to moving money via the internet and mobile banking, everything is possible. The withdrawals can be done via branch visits, ATMs, and cheques.
Also, ZBAs usually support NEFT, IMPS, UPI, Scan & Pay, and other transaction methods. Even e-mandates are available to eliminate the pain of monthly recurring payments. Other benefits include locker facilities, access to various government schemes and subsidies, direct benefit transfer, and easy access to loans and credit facilities. How’s that for financial inclusivity?
ZBAs represent cost-effective and profitable banking. They don’t attract penalties when the balance falls below the prescribed minimum balance limit. Accounts like Kotak811 don’t even charge for transactions and withdrawals, though conditions apply. So, you can pay your bills and make any other recurring payments directly through a ZBA free of cost. Also, the bank won’t charge you for issuing debit cards, credit cards, passbooks, and cheque books.
- Debit & Credit Cards:
Debit cards are a common fixture with all ZBAs. Feel free to use them to shop your heart out, withdraw cash at an ATM, make online transactions and contactless payments, and manage your account. Kotak811 offers a complimentary virtual debit card just when you open a bank account online free of cost. Once you apply, your physical debit card will be couriered to your doorsteps within a few days of account opening. Subject to eligibility, you can even access a credit card on a ZBA.
- Investment Flexibility:
Investment tools, such as Term Deposits, prevent you from withdrawing funds within the lock-in period. On the contrary, Kotak811 not only offers easy liquidity but an active money facility as well. Your additional funds parked in the ZBA can be automatically moved into the Term Deposit Ac and back into the ZBA when needed. That helps you conveniently build your savings over time.