Basic Savings Bank Deposit Account
Also written BSBDA · Basic Savings Bank Deposit Account (BSBDA) · BSBD account
A zero-balance bank savings account, needing no opening deposit, introduced to bring everyone into the banking system. A holder cannot open any other savings account in the same bank.
In plain language
Many people stay out of banks for a simple reason: they cannot keep a minimum balance, and they are charged when they fall below it.
The Basic Savings Bank Deposit Account removes that barrier. It is a zero-balance savings account. You do not need to put money in to open it, and you are not penalised for keeping little in it. The ATM card and passbook are free.
It exists for financial inclusion: getting people who keep cash at home into the banking system, where their money is safer, earns interest and helps them become eligible for loans.
How it works
The booklet (Chapter 4) lists these features:
- Introduced to promote financial inclusion.
- Zero balance savings account without any requirement of an initial deposit.
- Can be opened by individuals and also minors (through their guardian).
- Relaxed conditions for the number of deposits and withdrawals in a month.
- ATM card and passbook are issued free of charge.
- A BSBDA holder is not eligible to open any other savings bank deposit account in that bank.
Why a bank account at all? The same chapter gives three drawbacks of keeping cash at home: it is unsafe (theft, natural calamities), you lose interest income, and you have no or low credit eligibility, because deposits in a bank create eligibility for loans.
KYC still applies. To open any type of bank account you need a photograph, proof of identity and proof of address.
A worked example
Amounts are illustrative.
Savitri works as a cook in three homes in Jaipur and is paid Rs 9,000 a month in cash. She keeps the money in a tin at home. Last year Rs 6,500 went missing when her room was broken into.
She opens a BSBDA with her Aadhaar and a photograph. She deposits nothing on day one, and there is no minimum balance to maintain, so a slow month does not cost her a penalty. She receives an ATM card and a passbook free of charge.
Each month she deposits what she does not need. After a year she has built up about Rs 18,000. That money is no longer at risk in a tin, it earns savings interest, and her deposit history with the bank helps when she later asks for a small loan.
When her employer suggests she open a second, regular savings account in the same bank for her salary, the bank declines. A BSBDA holder cannot hold another savings account in that bank; she can use the BSBDA itself.
Why NISM asks about it
Chapter 4 (Savings Related Products) lists the BSBDA in the table of bank account types, and Chapter 9 (Government Schemes) covers the Pradhan Mantri Jan Dhan Yojana, which offers a similar zero-balance account. The favourite question is the one-savings-account-per-bank restriction, and the favourite confusion is BSBDA versus BSDA.
Common exam traps
- BSBDA is a bank account; BSDA is a demat account. Basic Savings Bank Deposit Account versus Basic Services Demat Account. One letter apart, completely different products.
- Zero balance and no initial deposit are both features. An option that needs a minimum opening deposit is wrong.
- No other savings account in that bank. The restriction is within the same bank, not across all banks.
- Minors can open one through a guardian.
- KYC is not waived. The account removes the balance requirement, not the identity check.
- The purpose the booklet gives is financial inclusion, not higher interest.
Check yourself
1.Which of the following is a feature of a Basic Savings Bank Deposit Account (BSBDA)?
- a)It requires a minimum initial deposit of ₹1,000
- b)It is a zero balance account introduced to promote financial inclusion, and its holder cannot open any other savings bank deposit account in that bank
- c)It may be opened only by individuals above 18 years of age
- d)It charges for the ATM card and passbook
Show the answer
Answer: (b) It is a zero balance account introduced to promote financial inclusion, and its holder cannot open any other savings bank deposit account in that bank
The chapter lists five features: "Introduced to promote FINANCIAL INCLUSION. ZERO BALANCE savings account WITHOUT ANY REQUIREMENT OF AN INITIAL DEPOSIT can be opened for individuals AND ALSO MINORS (through their guardian). Relaxed conditions for number of deposits/withdrawals in a month. ATM Card, passbooks are issued FREE OF CHARGE. BSBDA account holders are NOT ELIGIBLE FOR OPENING ANY OTHER SAVINGS BANK DEPOSIT ACCOUNT IN THAT BANK." Options (a), (c) and (d) each contradict one of those. The last feature is the most examined, and its boundaries matter: it bars another savings account in that bank — it does not bar a fixed deposit, a recurring deposit, or a savings account at a different bank. The logic is that a free, no-minimum account exists so that someone with very little money can be banked at all, not as a cheaper second account alongside a regular one.
2.A father wants his 11-year-old son to have a bank account with a debit card. What does the chapter permit?
- a)No account is possible until the child turns 18
- b)Minors of any age may open a savings account through a guardian, and minors above 10 years may additionally avail internet banking, ATM/debit card and cheque book facilities
- c)Only a fixed deposit may be opened in a minor's name
- d)A minor may open an account only if the guardian holds a BSBDA
Show the answer
Answer: (b) Minors of any age may open a savings account through a guardian, and minors above 10 years may additionally avail internet banking, ATM/debit card and cheque book facilities
The savings account entry states: "MINORS OF ANY AGE can also open a savings bank account through their NATURAL OR LEGALLY APPOINTED GUARDIAN. MINORS ABOVE AGE OF 10 YEARS can also avail ADDITIONAL BANKING FACILITIES like internet banking, ATM/debit card, cheque book facility, etc." So both halves of the father's wish are available to an 11-year-old — the account through the guardian, and the card because the child is above ten. Note also that the BSBDA can likewise be opened "for individuals and also minors (through their guardian)", so a zero-balance option exists. Option (d) invents a condition the chapter does not impose; the BSBDA restriction runs the other way, barring its holder from opening another savings account in that bank.
3.An investor holds equity worth ₹45,000 in a Basic Services Demat Account. What annual maintenance charge applies, and how does BSDA differ from BSBDA?
- a)₹100, and BSDA is another name for BSBDA
- b)Nil, because equity holdings up to ₹50,000 attract no AMC — and BSDA is a demat account with a DP, while BSBDA is a bank savings account
- c)Regular demat charges, since BSDA has no concession for equity
- d)Nil, and both BSDA and BSBDA are held with a Depository Participant
Show the answer
Answer: (b) Nil, because equity holdings up to ₹50,000 attract no AMC — and BSDA is a demat account with a DP, while BSBDA is a bank savings account
The booklet's slab table sets AMC at NIL for equity holdings up to ₹50,000 (or debt holdings up to ₹1,00,000), a maximum of ₹100 for equity between ₹50,001 and ₹2,00,000, and charges as applicable to regular demat accounts above ₹2,00,000. Note the asymmetry candidates miss — the first equity threshold is ₹50,000 while the first debt threshold is ₹1,00,000. The BSDA exists because "SEBI with a view to achieve WIDER FINANCIAL INCLUSION... In order to REDUCE THE COST of maintaining securities in demat accounts for RETAIL INDIVIDUAL INVESTORS", and its other benefits are free periodic transaction and holding statements, two free physical statements per billing cycle and at least two Delivery Instruction Slips at account opening. The acronym trap is deliberate: BSDA holds securities with a Depository Participant; BSBDA from Chapter 4 holds money at a bank.
Where this is taught
Free preparation for NISM Series SEBI-ICERelated terms
- Basic Services Demat AccountA low-cost demat account for a small investor who holds only one demat account and whose holdings stay within Rs 2 lakh of debt and Rs 2 lakh of non-debt securities — its annual charge can be nil.
- Financial inclusionGovernment and RBI efforts to bring every household into the formal banking system — zero-balance accounts, low-cost demat accounts and schemes like Jan Dhan Yojana are the booklet's three examples.
- Know Your CustomerThe identity and address check every investor must clear before a bank, broker or depository participant will open an account — mandatory under the Prevention of Money Laundering Act, 2002.
- Pradhan Mantri Jan Dhan YojanaThe Government's financial inclusion scheme launched in August 2014: a zero-balance bank account with a RuPay debit card, insurance cover, an overdraft facility and direct benefit transfers.
- Savings Bank (SB) accountAn ordinary bank savings account paying low, liquid interest, with no TDS on the interest itself — distinct from the zero-balance Basic Savings Bank Deposit Account.
- Commercial bankA regulated deposit-taking institution supervised by the Reserve Bank of India, inspected and audited at intervals, offering savings, current, fixed and recurring deposit accounts.
- Deposit insuranceThe Central Government scheme that insures every bank deposit up to Rs 5 lakh per customer in a bank, so depositors get that much back even if the bank itself fails.