RBI issues new guidelines for minor accounts; children over 10 can operate accounts independently

The Reserve Bank of India (RBI) has introduced new rules allowing children aged 10 years and above to independently open and operate savings or term deposit accounts. The guidelines, issued through a circular on Monday, apply to all commercial banks, including primary (urban) cooperative banks and district central cooperative banks.

The RBI reviewed and simplified older guidelines, combining them into a single framework to make the process of opening and operating bank accounts for minors more efficient.

Under the new rules:

Any minor can open a savings or term deposit account through their natural or legal guardian.

Children aged 10 years and above are now permitted to independently open and manage their own accounts.

Banks have been given the flexibility to set specific terms and conditions for minor accounts based on their internal risk management policies. This includes setting limits on the amount that can be held in the account. These terms must be clearly communicated to the young account holders.

Once the minor turns 18, banks are required to obtain fresh operational instructions and a new specimen signature to continue account operations.

Banks are also allowed to offer additional services such as internet banking, ATM access, debit cards, and chequebooks to minor account holders, provided these services are deemed suitable and safe for young users.

The RBI emphasized that these accounts must always maintain a positive balance and must not be linked to loans or allowed to go into overdraft.

In line with Know Your Customer (KYC) norms, banks must carry out proper identity verification while opening accounts for minors and continue periodic verification over time.

All banks are required to update or create internal policies in accordance with the new RBI guidelines by July 1, 2025.