Bank is now available at your door step
People in India can open a savings bank account by filling up the account opening form with a latest photograph and submitting documents to comply the “know your customer” (KYC) norms, i.e., proof of our identity and residence.
How to open account when we have no money
Now we do not require money to open an account. The Reserve Bank of India has advised all banks to open saving accounts with “NIL” balance. It is called a Basic Savings Bank Deposit Account which can be opened by any person without the requirement of maintaining a minimum balance.
Basic savings bank deposit account
Basic savings bank deposit account is a saving bank account with NIL balance. Banks will not charge fee for deposit of money any number of times. In addition, banks will not charge for four withdrawals during a month.
We will also get a passbook and an ATM/smart card without any fee. We can use this account for our day to day needs like deposit, withdrawal, remittances, direct credit of social benefits, etc.
Know your customer (KYC)
Banks are required to know our particulars before opening of the accounts as per KYC regulations. Hence we need to submit necessary KYC documents, i.e., a photograph, proof of identity and proof of residence to the bank along with account opening form. The account can also be opened on the basis of the Aadhar Card.
Persons not having above documents may open the account under relaxed KYC procedure based on MGNREGA job card or self certification. The accounts opened under relaxed procedure will be treated as small accounts and will be subject to certain limitations.
Who are business correspondents?
Now we do not need to have a bank branch in our area to avail of banking facilities, banks are appointing business correspondents (BC) who work as agents of the banks. They are local persons who have roots and economic interest in the area. They will provide us all the banking services in our village/ nearby villages.
At the time of appointment of BC, the bank officials would introduce the BC to the villagers. We can also get the information about BC from Gram Panchayat.
How does a BC function?
Banks have been allowed to appoint local individual persons and others as BC to work as agents of the banks. The BC uses Information and Communication Technology (ICT) based devices such as handheld machines, smartcard based devices, mobile phones, etc. to carry out the banking transactions.
Is the money safe with a BC?
Business correspondent is a mode of providing banking service at our doorstep as bank branch is far off from our area. Depositing our money with BC is as good as depositing with a bank branch.
The transactions are done through the ICT based devices and accounted in the books of the banks. The customers get immediate verification of their transactions as cash deposited/withdrawn by customers through the BC is acknowledged by issue of a receipt on behalf of the bank.
Additionally, transactions through BCs are done on the basis of our biometrics or a PIN number and thus no one else can do the transactions in our account.
Services provided through BCs
BCs will provide the facility of saving deposit accounts with inbuilt overdraft, fixed deposit and recurring deposits. They will also allow remittance of funds from our accounts and receipt of funds into our account.
Besides, they will provide credit for income generating activities through Kisan Credit Cards (KCCs) for farming activities and General Credit Card (GCC) for non farm based activities.
What is overdraft, how is it different from other loans?
Small overdraft is inbuilt in the saving bank account to take care of the our emergent miscellaneous needs. We can withdraw the amount up to the limit of overdraft without going through separate documentation for availing small amount.
Thus, it facilitates timely availability of money in cases of emergencies. We are required to pay the interest on the amount of overdraft as it is a loan given by the bank. Other loans like KCC and GCC are provided by the banks for a specific purpose of income generating activities.
Source: Financial Literacy Guide, Reserve Bank of India