What changed
Earlier, only mothers could act as guardians for minors' accounts (for fixed, savings, and recurring deposits); now any natural or legally appointed guardian is allowed. Minors above 10 years may be allowed to open and operate savings bank accounts independently, if they so desire, at bank's discretion, with age and amount limits. Banks can now offer internet banking, ATM/debit cards, and cheque books for minor accounts, provided accounts are never overdrawn.
What it means for you
This circular simplifies and standardizes minor account opening across banks, promoting financial inclusion. Banks must update their KYC and risk management policies to set appropriate age and transaction limits for independent minor accounts. Offering additional facilities like debit cards to minors can boost customer engagement but requires robust monitoring to prevent overdrafts.
What you must do
- Update account opening forms and procedures to accept any natural or legally appointed guardian for minors of any age.
- Define internal age and transaction limits for minors above 10 years who wish to operate savings accounts independently.
- Decide on minimum documentation requirements for minor accounts as per your bank's risk management framework.
- Ensure systems are in place to prevent overdrafts in minor accounts and to obtain fresh signatures upon the minor attaining majority.
- Review and possibly extend additional banking facilities (internet banking, ATM/debit cards, cheque books) to minor accounts with appropriate safeguards.
Who it affects
All scheduled commercial banks (excluding RRBs), Minors and their guardians, Bank operations and compliance teams, Branch managers handling account opening
Can a minor below 10 years open a bank account independently?
The circular does not explicitly address minors below 10 years opening accounts independently. It states that a minor of any age can open an account through a guardian, and only minors above 10 years may be allowed to open and operate savings accounts independently, if they so desire. Therefore, it is implied that minors below 10 years cannot open accounts independently.