Bank Accounts for Minors: The Reserve Bank of India (RBI) has issued revised guidelines on the opening and operation of deposit accounts in the name of minors. This comes after a comprehensive review aimed at rationalizing and harmonizing existing practices followed by various banking institutions.
Previously, there was inconsistency in how banks dealt with accounts held in a minor’s name—especially in terms of whether a mother could act as a guardian, and how much autonomy minors had in operating their accounts. The updated circular addresses these issues in detail.
Key Provisions of the Revised Guidelines
- Accounts for Minors Through Guardians
Minors of any age can now open savings and term deposit accounts.
These accounts must be operated through their natural or legal guardians.
A mother may be recognized as a guardian, even when the father is alive. This is supported by RBI’s historical guidance (e.g., circular DBOD.Leg.BC.158/C.90(H)-76 dated December 29, 1976), which resolved legal ambiguity related to guardianship under the Hindu Minority and Guardianship Act, 1956.
- Independent Account Operation by Minors Aged 10 and Above
Minors aged 10 years or above may open and independently operate their savings or term deposit accounts, if they so desire.
Banks may determine limits (like maximum balance, transaction types) and terms based on their internal risk management policies.
These terms must be clearly communicated to the minor account holders.
- When a Minor Attains Majority (Turns 18)
Banks must obtain new operating instructions and updated specimen signatures from the customer.
If the account was being operated by a guardian, the balance must be confirmed with the now-major customer.
Banks are expected to proactively communicate these requirements before the customer turns 18, to ensure compliance without disruption.
- Additional Banking Facilities for Minors
Banks may provide internet banking, debit/ATM cards, cheque books, etc. to minor account holders.
This is subject to internal policies on:
Risk management
Product suitability
Customer appropriateness
Banks have full discretion on whether and how to offer such services.
- No Overdrafts Allowed
Minor accounts, whether operated independently or through guardians, must always remain in credit.
Overdrafts and negative balances are not permitted under any circumstance.
- Customer Due Diligence (KYC)
Banks must comply with the RBI’s Master Direction on KYC, 2016.
This includes:
Initial due diligence at the time of account opening
Ongoing monitoring and updates
These safeguards ensure that minor accounts are not misused and remain compliant with anti-money laundering and counter-terrorism financing rules.
Compliance Timeline
Banks are required to revise or create policies in line with these guidelines by July 1, 2025.
Until then, existing policies may continue to be followed.
Why This Matters: Key Implications
For Banks:
Policy updates are mandatory.
Must incorporate age-based access, risk-based facilities, and clear communication protocols.
Ensure legal clarity and uniformity across all branches.
For Parents/Guardians:
Clear provisions for mothers to act as guardians help reduce red tape and empower women.
Flexibility in choosing account types and control.
For Minor Account Holders:
Greater financial literacy and autonomy.
Empowered to manage accounts responsibly from a younger age (10+).
Also Read | Vijay Kedia’s Millionaire Mantra: Salary won’t make you rich — Here’s what will
No GST on UPI payments above ₹2,000, Government clarifies
IREDA Q4 Results: Net profit surges 49% to Rs 502 crore, revenue up 37%
Good news for home loan borrowers: SBI, PNB, BoB, 3 others cut lending rates