RBI allows Minors above 10 years to operate account independently without Guardian, Check new rules and guidelines as per RBI Circular

RBI allows Minors above 10 years to operate account independently: In an important move to make banking more accessible and simplified for children and teenagers, the Reserve Bank of India (RBI) has released new guidelines for banks regarding the opening and operation of deposit accounts for minors. RBI has allowed minors above 10 years of age to operate account independently without the need of a legal guardian. These updated guidelines have been issued under the powers given to the RBI under the Banking Regulation Act, 1949. All earlier circulars that conflict with the new rules will be considered withdrawn from July 1, 2025. Check all the new rules and guidelines given below.

What are the New RBI Guidelines for Minor account operation?

The RBI has revised earlier rules after a thorough review to make them easier to understand and implement. Here are the important points from the new circular:

1. Accounts for Minors Can Be Opened by Guardians

• Children of any age can now have a savings account or a fixed deposit account.
• These accounts can be opened and operated by the child’s natural guardian (parents) or legal guardian.
• The mother can also act as the guardian while opening the account, as per previous RBI instruction dated December 29, 1976.

2. Minors Aged 10 and Above Can Operate Accounts on Their Own

• Banks may allow children aged 10 years or older to open and manage their accounts independently, if they wish.
• However, this decision depends on the bank’s internal policy and risk management framework.
• Banks can also set limits on how much money the minor can deposit or withdraw and must clearly communicate these conditions to the account holder.

3. When a Minor Becomes an Adult (Turns 18)

• Once the account holder turns 18, banks must:
  • Collect a new signature and updated instructions for operating the account.
  • If the account was earlier operated by a guardian, the account balance must be confirmed and reviewed.
  • Banks must inform the customer in advance and ensure all formalities are completed on time.

4. Additional Banking Facilities May Be Offered

• Banks can offer facilities like internet banking, debit cards, ATM access, or cheque books to minors.
• These services will be provided based on:
  • The bank’s internal risk policies.
  • The suitability of the product for a minor.
  • Whether it is appropriate for the customer.

5. No Overdraft Allowed in Minor Accounts

• Whether the account is managed by the minor or their guardian, it must always stay in credit (positive balance).
• Overdrafts (negative balances) are strictly not allowed in accounts held by minors.

6. KYC Rules Still Apply

• Banks must follow the Know Your Customer (KYC) rules when opening a minor’s account.
• They must also carry out ongoing verification and due diligence in line with the KYC Master Directions, 2016, which are updated from time to time.

7. Deadline for Banks: July 1, 2025

• Banks have been given time until July 1, 2025, to update their existing policies or create new ones to follow these guidelines.
• Until then, banks can continue with their current policies.

Opening of Bank Accounts in the Names of Minors with Mothers as Guardians (RBI Guidelines dated December 29, 1976)

It has been brought to our notice that considerable difficulty is being experienced by women customers in opening bank accounts in the names of minors, with mothers as their guardians. Presumably, the banks are reluctant to accept the mother as a guardian of a minor, while father is alive in view of section 6 of the Hindu Minority and Guardianship Act, 1956, which stipulates that the father alone should be deemed to be the guardian in such case.

To overcome this legal difficulty and to enable the banks to open freely such accounts in the name of minors under the guardianship of their mothers, it has been suggested in some quarters that the above provisions should be suitably amended. While it is true that an amendment of the above Act may overcome the difficulty in the case of Hindus, it will not solve the problem for other communities as minors belonging to Muslim, Christian, Parsi Communities would still be left out unless the laws governing these communities are also likewise amended.

The legal and practical aspects of the above problem were, therefore, examined by us in consultation with the Government of India and we are advised that if the idea underlining the demand for allowing mothers to be treated as guardians relates only to the opening of fixed and savings bank accounts, there would seem to be no difficulty in meeting the requirements as, notwithstanding the legal provisions, such accounts could be opened by banks provided they take adequate safeguards in allowing operations in the accounts by ensuring that the minors’ accounts opened with mothers as guardians are not allowed to be overdrawn and that they always remain in credit.

In this way, the minors’ capacity to enter into contract would not be a subject matter of dispute. If this precaution is taken, the banks’ interests would be adequately protected. We shall therefore, be glad if you will kindly apprise all your branches of the position as stated above and instruct them to allow minors’ accounts (fixed and savings only) with mothers as guardians to be opened, whenever such requests are received by them, subject to the safeguards mentioned above.