A directive from India's central bank means that FIs must offer ATM-enabled accounts with no minimum balance requirements to the country's poorest citizens.
Previously, the RBI had asked banks to offer no-frills accounts, but determined that not enough progress was being made toward its objective of universal financial inclusion, said an article by Times of India. At least in part, this goal reflects the government's intention to begin distributing benefits by electronic means.
"With a view to doing away with the stigma associated with the nomenclature 'no-frills' account and making the basic banking facilities available in a more uniform manner across banking system, it has been decided to modify the guidelines" RBI said in its circular.
As a result of the directive, all current no-frills accounts will be converted to basic accounts. Also, the basic savings account must be the customer's sole account — any other accounts would have to be closed, presumably to prevent citizens from shifting from a fee-charging savings account to the no-cost account.
RBI also requires that the account facilitate cash withdrawal via ATM/Debit card, with up to four ATM withdrawals allowed per month. Additionally, the account must allow the customer to send or receive funds via electronic transfer the Times of India article said.
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