What changed
Earlier, banks were advised to allow minors’ accounts (fixed and savings deposit accounts) with mothers as guardians, later extended to recurring deposits. Now, any natural or legal guardian can open accounts for minors of any age. Minors above the age of 10 years may be allowed to open and operate savings bank accounts independently, if they so desire, at bank discretion. Banks can now offer additional facilities like ATM, debit cards, internet banking, and cheque books, subject to no overdraft and always-in-credit condition.
What it means for you
UCBs can now onboard minor customers more flexibly, supporting financial inclusion goals. Banks must set their own risk-based limits for independent minor accounts and decide on documentation. Offering debit cards and internet banking to minors can boost customer loyalty but requires robust systems to prevent overdrafts. On attaining majority, banks must update account records with fresh signatures and instructions.
What you must do
- Update account opening policies to allow minors of any age with natural or legal guardians.
- Define internal age and amount limits for minors above 10 years to operate savings accounts independently, if they so desire.
- Decide minimum documentation requirements for minor accounts as per your risk management.
- Ensure minor accounts never go overdrawn and always remain in credit, especially when offering ATM/debit cards or internet banking.
- On minor attaining majority, obtain confirmation of balance, and if the account was operated by guardian, obtain fresh specimen signature and operating instructions from the erstwhile minor.
Who it affects
All Primary (Urban) Co-operative Banks, Minors and their guardians, Bank operations and compliance teams
Can a minor below 10 years open a savings account independently?
No. Minors below 10 years can only open accounts through a natural or legally appointed guardian. Only minors aged 10 and above may be allowed to open and operate savings accounts independently, at the bank's discretion.
What additional facilities can UCBs offer to minor accounts?
UCBs can offer internet banking, ATM/debit cards, and cheque book facilities, but must ensure the account is never overdrawn and always remains in credit.
What happens when the minor attains majority?
The erstwhile minor must confirm the balance. If the account was operated by a guardian, the bank must obtain fresh operating instructions and specimen signature from the now-major account holder.