GUWAHATI: The Reserve Bank of India (RBI) on Monday said banks are now free to let minors over the age of 10 open and manage savings and term deposit accounts independently.
Banks can also provide additional facilities like internet banking, ATM/debit cards, and chequebook services to minor account holders, depending on their internal risk management policy, product suitability, and customer appropriateness, as per an RBI circular.
Earlier, minors could only open savings accounts. Now, with the recent update, they can open savings as well as term deposit accounts. The previous RBI guidelines did not have provisions for providing internet banking, ATM/debit card, or cheque book facilities to minors.
Besides, the RBI explained that minors of any age could still open and maintain savings and term deposit accounts under a natural or legal guardian. The circular reiterated that such accounts could be opened by minors with their mother as guardian, too.
The RBI also added that children over the age of 10, and subject to terms and conditions specified by banks by their risk management policies, can be permitted to operate savings and term deposit accounts independently if they so desire.
Such terms and conditions should be communicated to the account holder. On reaching majority age, banks need to get new operating instructions and current specimen signatures from the account holder.
Where the account is being operated by a guardian, confirmation of balance should be ensured, and banks should take proactive measures to inform of these requirements to ensure a hassle-free transition as the minor reaches majority.
Additionally, the RBI directed banks to make sure that minor accounts, whether run by themselves or by a guardian, are never overdrawn and must always be in a credit balance.
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