New RBI Rule: Minors Aged 10 and Above Can Now Open Savings and Term Deposit Accounts

The Reserve Bank of India (RBI) in its latest update dated 21st April, has allowed minors aged 10 years and above to independently open and operate bank accounts. According to the updated RBI guidelines, minors who are at least 10 years old can now independently open both savings bank accounts and term deposit accounts in their name, without the involvement of a parent or legal guardian.

RBI's New Guidelines on Minor Accounts Explained

As per the Reserve Bank of India's revised instructions issued to all commercial and cooperative banks, minors who meet the minimum age requirement can not only open bank accounts but also manage them independently. The banks have the freedom to fix transaction limits and terms of operation based on their internal risk management policy.

"Minors of any age may be allowed to open and operate savings and term deposit accounts through his/her natural or legal guardian. They may also be allowed to open such accounts with their mother as guardian in terms of RBI's Circular DBOD.Leg.BC.158/C.90(H)-76 dated December 29, 1976." The Circular Mentioned.

The RBI also clarified that while minors above 10 can operate their accounts independently, children below that age can continue to open and operate accounts through their parents or legal guardians.

The second part of the circular stated, "Minors above such an age limit, not less than 10 years and up to such an amount and such terms as may be fixed by the banks keeping in view their risk management policy, may be allowed to open and operate savings/term deposit accounts independently, if they so desire, and such terms shall be duly conveyed to the account holder."

Banking Services for Minors to Be Offered as Per Bank Policy

The central bank has further stated that banks may choose to offer additional banking facilities to minor account holders, such as ATM or debit cards, cheque books, and internet banking. However, these services will be subject to the individual bank's assessment of product suitability and customer appropriateness, ensuring responsible banking practices. Each bank will decide which facilities to provide to minors, keeping in view the risks involved and the ability of the minor to responsibly handle such tools.

It should be noted that the RBI has directed that accounts held by minors, whether they are operated independently or through a guardian, cannot be overdrawn in any way. This means that these accounts have to stay in credit at all times. In order to prevent misuse, banks additionally need to do appropriate customer screening when opening an account and maintain continuous verification. Once a minor turns 18 and becomes a legal adult, banks must obtain fresh operating instructions and the specimen signature of the account holder to continue smooth operation of the account.

RBI Also Sets Deadline for Policy Alignment by July 1, 2025

By July 1, 2025, all banks are required by the Reserve Bank of India to update their internal policies with the updated guidelines. In order to implement the new rule that allows minors over the age of ten to open and manage their own bank accounts, banks will need to either implement new policies or amend existing ones.