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RBI/2005-06/244
RPCD.CO.No.RRB.BC.58/03.05.33 (F)/2005-06
December 27, 2005
The Chairmen.
All Regional Rural Banks
Dear Sir,
Financial Inclusion – Zero balance accounts in RRBs
Please refer to Paragraph 96 of the Mid-term
Review of Annual Policy Statement for the year 2005-06.
2. The Annual
Policy Statement of April 2005, while recognizing the concerns in regard
to the banking practices that tend to exclude rather than attract vast sections
of population, urged banks to review their existing practices to align them
with the objective of financial inclusion. While recognising the role of RRBs
in providing basic and affordable banking services in their respective areas
of operation, it is observed that the requirement of minimum balance by RRB/s
may deter a sizeable section of population from opening / maintaining bank accounts.
3. In this context, with a view to achieving the objective
of greater financial inclusion, all RRBs are advised to make available a basic
banking 'no-frills' account either with 'nil' or very low minimum balances
as well as charges that would make such accounts accessible to vast sections
of population. The nature and number of transactions in such accounts could
be restricted, if considered essential, but made known to the customer in advance
in a transparent manner. All RRBs are advised to give wide publicity to the
facility of such a 'no-frills' account indicating the facilities and charges
in a transparent manner.
4. In order to encourage more and more persons in their area
of operation, to open 'zero balance' accounts, RRBs may explore the provision
of small overdraft facility to account holders.
The limit of such overdraft could
be reviewed depending on repayment record and may not be linked to any specific
activity/end-use or security. Rates of interest may be fixed as applicable to
normal clean overdrafts. RRBs may devise a simplified account opening-cum-overdraft
application form for such facilities, while adopting simplified procedures,
as appropriate to their local conditions, for ensuring compliance with 'Know
Your Customer' guidelines.
5. Please acknowledge receipt to our concerned Regional Office.
Yours faithfully,
(G.Srinivasan)
Chief General Manager
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