In an important step towards financial inclusion and preliminary financial literacy, the Reserve Bank of India (RBI) has allowed children over 10 years to open and operate and operate a term deposit accounts independently. This new regulation empowers young account holders to control their finance, with guidelines that should follow banks.
RBI Allows Children to Operate Bank Accounts
According to the latest instructions, children aged 10 and above can now open and manage their bank accounts independently. Although it was possible only with the participation of parents or legal parents, new guidelines of RBI directly change the control over the minor, subject to certain conditions determined by banks.
Banks Can Set Withdrawal and Transaction Limits
Children aged 10 years and above will be able to operate their accounts on their own. But banks will fix some limits as per their rules, such as how much money can be deposited or withdrawn. How much money can be withdrawn at one time. Banks can provide facilities like internet banking, ATM/debit card and cheque book to children. But this will depend on their risk
When the child turns 18, the bank will have to take a new signature from him. If the account was being operated by the guardian, then the balance will be verified. Apart from this, the account holder will also be informed about the new rules.
Current Rules for Minor Bank Accounts
- The bank account or term deposit account is under the control of the parents, and the child’s name is added as a co-account holder.
- The bank account or term deposit account can be transferred solely in the name of the child when the child is 18 years of age or above.
- Some banks still offer special bank account schemes like SBI Pehla Kadam Account or HDFC Kids Advantage Account.
- In these, children above 10 years of age can open a bank account and operate it themselves.
A Positive Step Towards Financial Empowerment for Kids
RBI‘s move is a progressive move to children above 10 to operate their own bank accounts that align with the need to promote financial awareness from an early age. While banks will implement safety measures, this regulation is a new chapter in child banking in India, which promotes financial confidence and freedom among the next generation.
