RBI Allows Minors Aged Over 10 Years To Take Charge Of Their Bank Accounts

The Reserve Bank of India (RBI) has revised its guidelines on deposit accounts for minors by allowing those aged 10 and above to independently open and manage both savings and term deposit accounts, as per the RBI circular issued to banks. This change is intended to provide minors more autonomy in managing their deposit accounts.

Minors were earlier allowed to open only savings accounts, but the new guidelines now permit them to open both savings and term deposit accounts. Banks may also offer additional services such as internet banking, ATM or debit cards, and chequebook facilities, depending on their risk management rules and the acceptability of these services for minors. These services will be provided only when the minor's ability to manage them is determined.

Also, the RBI allows minors of any age to open and manage accounts under the supervision of a guardian, either legal or natural. It also specifies that a mother may act as the guardian, offering flexibility for families.

Minors aged 10 and above are able to manage their savings and term deposit accounts independently. While banks have to make sure that the conditions and deposit limitations associated with these accounts match the bank's risk management guidelines. Also, these terms must be clearly communicated to the account holder.

When a minor reaches the age of majority (18), banks are required to get revised operating instructions and specimen signatures from the account holder. If the account was managed by a guardian, the bank must confirm the balance before transferring full control to the minor. Banks can take proactive measures to ensure that these conditions are completed in advance, such as notifying underage account holders about the procedure as they approach adulthood.

The RBI circular states that minor accounts must always have a credit balance, regardless of whether they are managed by a guardian or on their own. Overdrafts are not permitted, ensuring minors do not accrue debt.

Banks must perform due diligence when opening accounts for minors in accordance with the Know Your Customer (KYC) norms. Bank policies must be changed by July 1 2025, to align with the amended criteria.