No frills bank accounts - RBI issues instructions

By Vijay Kumar

As per the annual policy statement of April, 2005 the RBI recognised the fact that Banks tend to exclude rather than attract vast sections of the population from opening bank accounts by the requirement of minimum balance and charges levied. With the view to achieve greater financial inclusion Banks were directed to make available a basic “No frills” bank account with either Nil or very low minimum balance. Now the RBI in its circular dated 13-12-2005 has advised the Banks to give wide publicity to the ‘No frills’ accounts scheme indicating the facilities and charges in a transparent manner. RBI has clarified that the nature and number of transactions in such accounts could be restricted but should be made known to the Customers in advance in a transparent manner. Banks are required to send compliance reports within a month.

RBI circular 233/2005-06 Dt. 13-12-2005.