Latest RBI Regulations on Children’s Savings Bank Accounts
The Reserve Bank of India (RBI) has introduced new guidelines aimed at enhancing the process of opening and managing deposit accounts for minors. These updated regulations are designed to provide clarity and ensure adequate safeguards for young account holders. The guidelines allow minors to open savings and term deposit accounts with the assistance of their guardians, while also granting certain privileges to those aged ten and above to manage their accounts independently.
New Guidelines for Minor Accounts
Under the revised RBI guidelines, minors of any age can open and operate savings and term deposit accounts through their natural or legal guardians. This includes provisions for accounts to be opened with the mother as the guardian, in accordance with previous RBI directives. For minors aged ten and older, banks may permit them to independently manage their savings or term deposit accounts, subject to specific limits and conditions set by the banks. These measures aim to empower financially literate minors to take charge of their finances while ensuring that banks maintain necessary oversight.
Transition to Adult Accounts
As minors reach the age of majority, banks will require new operating instructions and a specimen signature from the account holder. If the account was previously managed by a guardian, the bank will confirm the account balance before allowing the young adult to take full control. To facilitate this transition, banks are expected to proactively inform account holders about these changes well in advance, ensuring a smooth shift to independent account management.
Additional Banking Services for Minors
The RBI guidelines also allow banks to offer additional banking services to minor account holders, such as internet banking, ATM/debit cards, and cheque books. However, these services will only be provided after the bank assesses the suitability of the product and the appropriateness for the customer, in line with their risk management policies. This flexibility aims to enhance the banking experience for young users while maintaining a focus on responsible financial practices.
Maintaining Account Integrity
To promote responsible financial habits, the RBI mandates that accounts held by minors, whether operated independently or through a guardian, must not allow overdrafts. It is essential for these accounts to maintain a positive balance at all times. Additionally, banks are required to conduct customer due diligence when opening deposit accounts for minors, adhering to the provisions outlined in the Master Direction on Know Your Customer (KYC) regulations. This ensures that the financial interests of young account holders are protected while fostering a culture of financial responsibility.
Observer Voice is the one stop site for National, International news, Sports, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.
Follow Us on Twitter, Instagram, Facebook, & LinkedIn
