RBI Allows Minors Aged 10 and Above to Operate Bank Accounts Independently – Key Guidelines Explained
New RBI Rule – The Reserve Bank of India (RBI) has released a new notification regarding the opening and operation of deposit accounts by minors. This marks a significant revision aimed at simplifying and aligning the existing norms related to minors’ savings and term deposit accounts.
RBI has previously issued guidelines to banks on how deposit accounts of minors should be handled. With the latest review, the central bank has introduced a more streamlined and harmonised approach.
Key Highlights of RBI’s Revised Guidelines:
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Accounts Through Guardians:
Minors of any age can open and operate savings or term deposit accounts through their natural or legal guardians. Banks may also allow account opening with the mother as guardian, as per the RBI circular dated December 29, 1976. -
Independent Operations for Minors Aged 10 and Above:
Children aged 10 years and above may be permitted to independently open and manage savings and term deposit accounts. This is subject to limits and terms decided by the respective banks based on their internal risk management policies. These terms must be clearly communicated to the minor account holders. -
Transition to Majority:
Once a minor turns 18, banks must obtain updated operating instructions and signature specimens from the account holder. If the account was previously operated by a guardian, banks should also verify and confirm the account balance. Banks are expected to initiate this process in advance to ensure a smooth transition. -
Additional Banking Facilities:
Based on the bank’s discretion and internal risk framework, minors may also be granted access to services such as internet banking, ATM/debit cards, and cheque books. These facilities will be extended keeping in mind product suitability and customer appropriateness. -
Credit-Only Accounts:
Whether operated by the minor or through a guardian, these accounts must not be overdrawn. Banks must ensure that the accounts always maintain a credit balance. -
KYC Compliance:
Banks must conduct proper customer due diligence when opening minor accounts and continue with periodic checks in accordance with RBI’s Master Direction on KYC, issued in 2016 and amended periodically.
New RBI Rule- These revised guidelines have been issued under Sections 35A and 56 of the Banking Regulation Act, 1949. All banks are required to update or implement new internal policies to align with these instructions by July 1, 2025. Until then, the current policies will remain in effect.
