What changed
RBI replaced paragraphs 86-92 of the Small Finance Banks - Responsible Business Conduct Directions, 2025 with new instructions on BSBD accounts. A definition for 'Digital Payment Transaction' was added, referencing the Payment and Settlement Systems Act, 2007. The new rules mandate free basic facilities like cash deposits, ATM cards, cheque books, and internet banking, with no minimum balance requirement.
What it means for you
Small Finance Banks must now offer BSBD accounts as a standard product with zero minimum balance and free essential services, deepening financial inclusion. Digital payment transactions (e.g., UPI, NEFT) won't count toward the monthly free withdrawal limit of four, encouraging digital usage. Banks need to update product offerings and fee structures by the April 1, 2026 deadline.
What you must do
- Review and revise BSBD account terms to ensure free basic facilities with no minimum balance requirement.
- Update systems to exclude digital payment transactions from the monthly free withdrawal count.
- Prepare to offer ATM cards, cheque books, and digital banking upon customer request without insistence.
- Communicate changes to customers and train staff on new BSBD account features before April 1, 2026.
Who it affects
Small Finance Banks, BSBD account holders, Bank operations and product teams, Compliance and legal departments
What is the effective date for these new BSBD account rules?
The directions come into effect on April 1, 2026, or earlier if a bank adopts them sooner. Banks are encouraged to implement as expeditiously as possible.
Are digital payment transactions counted as withdrawals in BSBD accounts?
No, digital payment transactions like UPI, NEFT, RTGS, and IMPS are not counted as withdrawals. Only ATM transactions and other withdrawals count toward the monthly free limit of four.
Can a bank charge for issuing a passbook or continuation passbook?
No, banks must provide a passbook or monthly statement free of charge. Issuance of a continuation passbook upon exhaustion of pages shall not attract any charge.