The Reserve Bank of India (RBI) announced that banks can now allow children over ten to create and independently operate term deposit and savings accounts. According to an RBI circular, banks may also provide minor account users other services including internet banking, ATM/debit cards, and checkbook services, contingent on their internal risk management policy, product acceptability, and customer appropriateness. Previously, only savings accounts could be opened by children. They can now open both term deposit and savings accounts according to the most recent upgrade.
The offering of internet banking, ATM/debit card, and checkbook services to minors was not covered by the prior RBI standards. Additionally, the RBI clarified that under a natural or legal guardian, minors of any age could still create and maintain savings and term deposit accounts. The circular reaffirmed that minors who have their mother as their guardian may also open such accounts. The RBI further stated that children over 10 may be allowed to manage savings and term deposit accounts on their own if they so choose, subject to the terms and restrictions set forth by banks in their risk management policies.
The account holder should be informed of these terms and conditions. On achieving majority age, banks need to receive updated operating instructions and current specimen signatures from the account holder. To guarantee a smooth transition as the minor reaches majority, banks should take proactive steps to notify the minor of these requirements and ensure balance confirmation when the account is being managed by a guardian. The RBI also instructed banks to ensure that minor accounts, whether managed by a guardian or by the child themselves, are never overdrawn and must always have a credit balance.
