The Reserve Bank of India (RBI) has issued new guidelines allowing minors to open and operate savings and term deposit accounts, either independently or with a guardian.
“Catch depositors young” seems to be the message from the RBI to banks, based on its latest circular regarding the opening and operation of deposit accounts for minors.
This circular, which states that minors of any age may be allowed to open and operate savings and term deposit accounts through their natural or legal guardian, comes in the context of deposit growth lagging behind credit growth in the banking system in recent years.
Minors can also be allowed to open such accounts with their mother as the guardian.
The central bank mentioned that minors aged 10 years and above may be permitted to open and operate savings/term deposit accounts independently if they wish, and these terms must be clearly conveyed to the account holder.
The opening and operation of the aforementioned deposit accounts will be subject to limits and terms set by the banks based on their risk management policies.
The RBI said that banks are free to offer additional banking facilities, such as internet banking, ATM/debit cards, and chequebook facilities, to minor account holders, depending on their risk management policies, product suitability, and customer appropriateness.
Banks must ensure that accounts of minors, whether operated independently or through a guardian, are not allowed to be overdrawn and always remain in credit balance.
Upon reaching the age of majority, fresh operating instructions and a specimen signature of the account holder must be obtained and kept on record. Furthermore, if the account is operated by a guardian, the balance should be confirmed.
Banks must take advance action, including communicating these requirements to minor account holders reaching the age of majority, to ensure these requirements are met.
The RBI has advised banks to make new or amend existing policies to align them with the latest guidelines by July 1, 2025. In the meantime, existing policies may continue.
Published on April 21, 2025
