The small finance banks have become important factors in terms of provision of financial services to the needy of the society. Several of these include the small finance bank zero balance account which is a core business strategy. It has contributed a lot towards increasing account holders and supporting clients cut across all society classes.
Understanding Small Finance Banks
Small finance banks are those banks that are particularly focussed on providing financial services to marginalised sectors of the Indian economy. These banks target providers of services, and processor organizations.
Significance of Zero Balance Account
The concept of small finance bank zero balance account within small finance banks has a lot of importance. Zero balance account is different from normal savings accounts. Here one is needed to maintain minimum balance for operations of the account. This feature lessens the impact of those who can barely maintain a balance or those whose income varies from time to time.
Benefits of Small Finance Bank Zero Balance Account
- Financial Inclusion: By providing zero balance accounts, these small finance banks are definitely helping those sections of society that were earlier outside the banking channel. With regard to people, it can be stated that the groups who were formally ‘unbanked’ or had no access to banking services are now able to obtain basic financial services.
- No Penalties: There has been so much attitude of charging customers, who failed to keep their account balance to a specific level. Unlike other accounts that attract penalties once the balance dips to zero, the customers do not need to bother about penalties making it easier and cheaper to bank.
- Easy Account Opening: Small finance banks are more liberal in the account opening of zero balance accounts, minimal documentation and KYC norms. The flexibility in account opening does a lot in ensuring that many people accept the banking services.
- Encourages Savings: Although there are no requirements of having a certain balance to be maintained in the accounts, the zero balance accounts actually compel the people to develop a good principle of saving. Funds can be deposited at the customer’s own convenience and does not require a large amount to be set aside at once to create the savings.
- Access to Banking Services: This goes hand in hand with all the normal banking amenities as are ATM/debit cards, internet banking, mobile banking, fund transfers among others. This makes it easier and convenient for the account holders to do their transactions.
Challenges and the Way Forward
Even though the small finance bank zero balance account has been a boon, there are still some problems. Fear, lack of information about the products, credit misconceptions and lack of physical infrastructures will always limit people from fully embracing these accounts.
To overcome these challenges related to small finance bank zero balance accounts, there is a need for a strong financial literacy crusade, association with local communities and NGOs, and the use of technology in reaching out. In conclusion, small finance bank zero balance accounts, are a helping in achieving the goals of financial inclusion and banking the unbanked. In this way, these accounts provide opportunities to be in the formal financial system and thus contribute to economic and social progress.
