In a progressive move aimed at financial inclusion and early financial literacy, the Reserve Bank of India (RBI) has issued new guidelines allowing children above the age of 10 to independently operate their own bank accounts. This significant shift marks a departure from the existing norm where parents or legal guardians solely managed the bank accounts of minors.
RBI’s New Guidelines: A Step Towards Financial Empowerment
According to a circular issued by the central bank to all commercial and cooperative banks, minors above the age of 10 can now independently open and operate savings and fixed deposit accounts. These young account holders will be granted autonomy to manage their funds, subject to specific terms and limits as defined by individual banks.
Until now, minors’ accounts were primarily managed by their parents or guardians. However, the new guidelines are intended to promote early financial awareness and responsibility among children, especially in a digital-first era where financial transactions are becoming increasingly integral to daily life.
What the RBI Circular Says
The RBI’s circular states that minors of any age can open and operate accounts through their natural or legal guardians. Additionally, the circular explicitly allows children to designate their mothers as legal guardians to open and manage their accounts.
Banks have been directed to implement these changes in line with their existing risk management policies. These policies will govern the account balance limits, withdrawal terms, and other operational conditions. Importantly, banks must inform customers clearly about these terms to ensure transparency and compliance.
Banks Can Offer Digital Access and Debit Cards to Minors
Going a step further, the RBI has empowered banks to offer additional banking facilities such as:
- Internet banking
- ATM/Debit cards
- Cheque book facilities
These services can be extended to minor account holders based on the bank’s discretion, internal risk policies, and product offerings. However, RBI has mandated that banks must ensure there is no overdrawing and that accounts always maintain a minimum balance.
Safeguards and KYC Norms
To prevent misuse and ensure secure financial transactions, banks are required to carry out appropriate due diligence and KYC (Know Your Customer) procedures while opening accounts for minors. This verification process is to be periodically reviewed and maintained throughout the tenure of the account.
Deadline for Banks to Revise Policies
The RBI has directed all banks to revise or formulate new policies in alignment with the updated guidelines by July 1, 2025. This gives banks ample time to evaluate their existing frameworks and incorporate child-friendly financial services responsibly.
Why This Move Matters
The ability to operate a bank account from a young age can be a transformative learning opportunity. Not only does it help children understand the value of money, savings, and budgeting, but it also aligns with the growing trend of financial inclusion in India.
Financial experts believe this policy shift could also lead to more customized banking products for young users, eventually cultivating a financially responsible generation ready to navigate complex financial systems from an early age.
