RBI Issues Revised Guidelines on Deposit Accounts for Minors
The Reserve Bank of India (RBI) has released revised guidelines to streamline the process of opening and operating deposit accounts for minors. Aimed at harmonising existing practices, these guidelines provide clarity for banks and greater financial inclusion for young account holders.
Under the new norms, minors of any age can open and operate savings or term deposit accounts through their natural or legal guardian. Notably, the provision also continues to allow mothers to act as guardians, in line with the RBI’s earlier circular dated December 29, 1976.
A significant change is that minors aged 10 years and above may now be permitted to independently open and operate savings or term deposit accounts. However, this autonomy is conditional upon the policies set by individual banks, which must factor in their risk management frameworks. The banks are required to clearly communicate the terms and limits of such operations to the young account holders.
When a minor account holder attains the age of majority (18 years), banks must obtain fresh operating instructions and an updated specimen signature from the individual. If the account was previously operated by a guardian, the balance must be confirmed. Banks are expected to take proactive measures, including advance communication, to ensure a smooth transition to adult account ownership.
Additionally, banks have the discretion to extend modern banking facilities such as internet banking, ATM/debit cards, and cheque books to minor account holders. These decisions should align with the bank’s risk assessment, customer suitability, and product appropriateness policies.
To protect minors from financial risk, the RBI mandates that their accounts must always maintain a credit balance and should not be overdrawn under any circumstances. This stipulation ensures financial discipline and security.
Banks are also required to perform customer due diligence at the time of opening a minor’s account and continue periodic reviews in accordance with the Master Direction on Know Your Customer (KYC), 2016, which is updated from time to time.
These revised guidelines have been issued under Sections 35A and 56 of the Banking Regulation Act, 1949. Banks are directed to align their policies with these norms by July 1, 2025. Until then, existing policies may remain in effect.
The move is expected to promote early financial literacy and responsible banking habits among minors, while ensuring adequate safeguards through regulated oversight.
