A Bank Account That Allows You to Withdraw All You Got

The Pradhan Mantri Jan Dhan Yojana (PMJDY), launched in 2014, is a national endeavour for financial inclusion through the provision of financial services, such as banking through savings accounts, remittance, credit, insurance and pension in an affordable manner, says an article published in The Economic Times in November 2014. About 125.5 million bank accounts were opened under this scheme as of January 31, 2015, says an article published in Moneycontrol in February 2015. Needless to say, the figure has risen significantly since then.

The PMJDY scheme offers banking services through zero balance saving accounts. Unlike similar previous schemes that only targeted villages, PMJDY aims at financial inclusion irrespective of region (rural or urban).

Features of Savings Accounts Under PMJDY

A zero balance savings account is a no frills account that offers basic banking facilities without the need to maintain a minimum balance. In other words, its gives you the benefit of withdrawing your entire deposit amount if you wish to. Unlike other savings accounts, this eliminates the risk of losing your account on non-maintenance of a minimum balance. On opening this account, you are entitled to a free debit card and passbook. All other banking services, such as cheque book, also come free of cost. However, you may be charged a nominal fee in case of re-issuance of cheque book in the same year.

You are allowed a maximum of four transactions in a month, including ATM withdrawals. Subsequent transactions are billed at a nominal fee. There are, however, no limits on the number of deposits you make in a month. You can also access free mobile banking services under this scheme.

The PMJDY has simple KYC rules and it is fairly easy to open a bank account under this scheme. An Aadhar Card can serve as proof of both identity and address.

Pros

This scheme also comes with beneficial freebies, such as accidental life cover of up to Rs 1 lakh. Account holders can avail overdraft facilities of Rs 5,000 six months after opening the account, subject to proper financial conduct during these six months. Subsidies, scholarships and other welfare benefits are directly transferred to the beneficiary’s account, eliminating the risk of leakage due to involvement of middlemen.

Cons

Although this is a lucrative scheme, it does come with some limitations as well. The total credit amount cannot exceed Rs 1 lakh in a financial year, while the total debit amount must not exceed Rs 50,000 at any point of time. You might not have to pay non-maintenance penalty like other savings accounts, although you have to activate your zero balance savings account to enjoy its benefits if it has been dormant for a specified time period.