RBI Grants Permission for Minors Over 10 to Independently Operate Savings Accounts

In a significant move aimed at empowering young individuals, the Reserve Bank of India (RBI) has announced that minors above the age of 10 will now be allowed to open and operate savings and term deposit accounts independently. The new directive, issued on Monday, aims to provide greater financial autonomy to minors and foster financial literacy from an early age.

According to a circular issued by the RBI to commercial and cooperative banks, minors who are 10 years or older can now independently open and manage their savings or term deposit accounts, provided they adhere to the terms and conditions set by the respective banks. The banks, while allowing this facility, will establish specific limits on the amounts that can be deposited and the associated terms, based on their risk management policies.

The circular further emphasized that once a minor reaches adulthood, they will be required to provide fresh operating instructions and a new specimen signature, which will be kept on record by the bank.

Additionally, banks will have the discretion to offer enhanced banking facilities, such as internet banking, ATM/debit cards, and cheque books, based on their internal risk management policies and the suitability of such services for the minor. However, the RBI has made it clear that these services should only be provided if deemed appropriate.

For minors of any age, the RBI clarified that they can still open and operate savings or term deposit accounts, but this would be done through a guardian—either a natural or legal guardian. The role of the mother as a guardian for opening such accounts was specifically highlighted in the RBI guidelines.

To ensure the safety of such accounts, the RBI mandates that minors’ accounts—whether operated independently or with the assistance of a guardian—should never be overdrawn. Banks will also need to ensure these accounts maintain a credit balance at all times. Furthermore, banks must perform customer due diligence when opening accounts for minors and continue their due diligence throughout the life of the account.

The RBI has given banks a deadline of July 1, 2025, to align their existing policies with these new directives and ensure compliance.

This policy change is expected to encourage young people to take their first steps toward managing their finances and understanding the intricacies of banking, laying a foundation for a more financially savvy generation.

Sources By Agencies