RBI Permits Minors Above 10 to Operate Bank Accounts Independently

Reserve Bank of India (RBI) issued revised directions allowing minors aged 10 years and above to independently open and operate savings and term deposit accounts. This move, aimed at promoting early financial literacy, will empower minors to manage money responsibly, within a safe and supervised banking environment. However, the RBI has set clear operational limits and conditions based on the bank’s risk management policy, and banks are required to ensure that minor accounts do not go into overdraft and maintain a credit balance at all times.

Key Highlights

Age Eligibility

• Minors of any age can open savings or term deposit accounts through a parent or legal guardian.
• Minors above 10 years may independently operate such accounts if desired and permitted by the bank’s policy.

Guardian Specification

• Minor accounts may be opened with either parent (including the mother) or a legal guardian.

Independent Operation Rules for Minors Above 10

• Banks can allow independent operations up to a limit set by their internal risk management policies.
• All such terms must be clearly communicated to the account holder.

Procedure After Attaining Majority

• Upon turning 18, the bank must obtain fresh operating instructions and specimen signatures from the account holder.

Facilities Offered to Minor Accounts

• Banks may offer services like internet banking, ATM/debit cards, and cheque books depending on,
• Risk management policy
• Product suitability
• Customer appropriateness

Credit Balance Requirement

• No overdraft is allowed on minor accounts.
• These accounts must always remain in credit regardless of how they are operated.

Customer Due Diligence

• Banks must conduct customer due diligence (CDD) at account opening.
• Ongoing due diligence is also required for minor accounts.

Implementation Deadline

• All banks must introduce new or amend existing policies to comply with these revised norms by July 1, 2025.