Zero balance accounts are saving accounts where the average monthly balance (AMB) rule is not applicable. Average monthly balance (AMB) is the minimum average of deposits required by the bank customers in their savings bank accounts.

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Despite no AMB, the zero balance accounts provide the usual facilities that come with a regular savings account. With a zero-balance savings account, most of the banks offer a free ATM-cum-debit card, passbook, and cheque book.

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Facilities like internet and mobile banking are offered by several banks too.

Most leading banks across the country offer the option of opening a zero balance savings account in order to encourage people to make investments.

These accounts are offered by banks to a specific category of customers such as salary account holders and on basis of Pradhan Mantri Jan Dhan Yojana (PMJDY) - a scheme with a mission of financial inclusion.

The country's largest lender State Bank of India (SBI) offers the facility of opening a zero balance account in the form of a basic savings bank deposit (BSBD), no-frills account, among others. The interest rate offered by SBI on a zero balance saving account is the same as that on a regular saving bank account.

(Also read: Investing in mutual funds? Avoid making these 5 mistakes)

For savings deposits balance up to Rs 1 lakh, SBI offers an interest rate of 2.70 percent per annum. Private sector lenders HDFC Bank and ICICI bank also offer the option of opening a BSBD account, wherein the customer is not required to maintain any particular minimum balance.

Here's a comparison of interest rates offered by top lenders on their zero balance accounts:

The specific number of free transactions every month is, however, allowed in these accounts.

In order to open zero balance accounts, customers are required to submit the basic KYC documents - identity proof and address proof.

First Published:Jun 12, 2020 2:37 PM IST