Zero balance account in a foreign bank? No kidding


I stared at the online transaction statement of my HSBC Savings account with dismay.  Oh man!  what now!  
This was the first Bank account that I had opened after coming to Bangalore - salary account in my first company.  Subsequently, I got a credit card from the same Bank and used the standing instruction facility to pay the card on the due date.  I moved Companies and the Bank for salary account changed as well.  But I did not close the account since I continued to use the credit card.   Pretty much the transactions in the account was the occasional transfer of money to the account and the monthly payment of credit card amount.

I had received a communication a year or so back asking me to maintain some minimum balance.  I failed to do so once and ended up with the first line above.  I got it reverted quoting my loyalty and so on.  

What had happened now?  I thought I did have the minimum balance.  I search the website and went through the account regulations.  I saw that the minimum balance amount had been increased (to be precise, doubled) from Jan 2014.  Hmm! how come I was not notified?  

In the good old days, these communication used to come in post.  These days, they are sent as email or better still, an email notifies you of monthly statement and you are expected to pull it from the online site and read.  I rarely bothered about the monthly statements since I hardly had any transaction, but consequently (possibly) missed out the notification on the change in minimum balance.

In any case, I was not in a position to maintain the balance and resolved to close the account.  I also resolved to close my credit card account as well for good measure, though I could have continued it and paid the dues from another Bank's account. 

"Now how do I close a Bank account?"  Let me check online, I thought.  While doing this, I stumbled upon Basic Savings Bank Deposit Account. At first glance, I thought this was an account to make fixed deposits (focusing on the term Deposit).  As I went through the page, it looked like a normal Savings Bank account to me, without minimum-balance stipulation.  The Debit card was free too!

I wondered if I should switch to that account - assuming it was possible.  I was also wary about the catch - how can there be no catch!

With trepidation, I made a visit to the Bank (almost a repeat of my Citibank visit for KYC - Metro train and all).

I approached the "May I help you lady" and said "I would like to close my account". She pressed some buttons in a monitor and generated a token slip.  She pointed out to a seating area. I sat on a seat, expecting a long wait.

But my token number was called in less than a minute.  I missed hearing the counter that was specified in the announcement.  I was shown a monitor which displayed a counter number.  I navigated a bunch of "cubicles" and reached my counter.

"Wow! that is a good looking lady", thought I, seeing the lady seated in the counter.  Before I could start, another lady came over, prettier.  She asked me to excuse her, which I was glad to.

I outlined the matter of my business.  The lady was quick to say "We will reverse your charges.  It will done by end of today".  Ok, what about the account?   Should I close or shift to the "basic" one?

"Please shift to the basic account.  You just need to sign here", she said thrusting across a form.

"But what is the catch? There must be some catch", said I.

"No catch, Sir.  This category of account is as per RBI regulations.", said she.  Ah, what do you know.

"So, why don't you switch users over to this account by default?" asked I.

"We can't do that, Sir.  You need to make the request".

I signed the form and she gave me an acknowledgement in a pre-printed slip.  (This was quite nice - I do not recall getting an acknowledgement when I visited Citibank for KYC submission).

And then she produced another card?  "Did we make you smile today?" it read with an option to check "Yes" or "No".

There was no reason for me to choose "No".

I was all done and it had taken less than 10 minute since I came in.  Contrast that with my effort to get a Demand Draft in Axis Bank.

After I went back to office, I decided to read up about the RBI regulation.  I found this FAQ entry in the RBI website..   Looks like this regulation has been there for a while - at least a year old.   A few interesting facts though (from the FAQ):

As notified in terms of Govt of India notification dated December 16, 2010, BSBDA-Small Accounts would be subject to the following conditions:
i. Total credits in such accounts should not exceed one lakh rupees in a year.
ii. Maximum balance in the account should not exceed fifty thousand rupees at any time
iii. The total of debits by way of cash withdrawals and transfers will not exceed ten thousand rupees in a month
iv. Foreign remittances can not be credited to Small Accounts without completing normal KYC formalities
v. Small accounts are valid for a period of 12 months initially which may be extended by another 12 months if the person provides proof of having applied for an Officially Valid Document.
vi. Small Accounts can only be opened at CBS linked branches of banks or at such branches where it is possible to manually monitor the fulfilments of the conditions
Evidently, the intention behind the policy is to enable anyone to open a Bank account in any Bank in India - a very noble thing indeed!

I then look at the websites of other Banks and saw that pretty much all the Banks have similar accounts in place.

Standard Chartered

to name a few.

I got a call a few hours after my Bank visit.  It was the HSBC lady. "Sir, I just called to tell you that your charge will be reversed by end of today".  Hmm!  I thought she had already told that to me in person.  "Great customer service",  I thought, feeling good I did not have to close the account.


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