RBI authorizes Minors above Ten to open Bank Accounts

• 24 Apr 2025
• 1552 Views

According to the fresh rules by the Reserve Bank of India (RBI), children above the age of 10 can now open and manage their own savings or term deposit bank accounts independently. This fresh rule applies to all the commercial and cooperative banks, including primary (urban) cooperative banks, state cooperative banks, and district central cooperative banks.

The Reserve Bank of India (RBI) rolled out a new circular on Monday, updating the rules around bank accounts for minors. This change follows a review of older guidelines that had been in place for several years. The RBI has now made things simpler by combining and streamlining the rules for opening and managing deposit accounts for minors.

According to the new guidelines, children of any age can have a savings or term deposit account opened and managed by their parent or legal guardian. However, kids who are 10 years or older now have the option to open and operate these accounts on their own, if they choose to.

Banks have the freedom to set specific terms for these accounts based on their internal risk policies. This means they can decide things like how much money to hold in these accounts and what rules apply. Importantly, all these terms must be clearly communicated to the young account holders.

What Happens When a Minor Turns 18? Here's What the New RBI Rules Say

When a minor account holder finally turns 18 and is officially an adult, the banks must update their account details. This includes collecting fresh operating instructions and a new signature from the account holder. If a parent or guardian earlier managed the account, the bank also needs to confirm the account balance. To avoid any last-minute hassle, banks must reach out to these account holders in advance and complete the necessary updates ahead of time.

Banks also have the option to offer more services, like internet banking, debit cards, ATM access, and cheque books, to minor account holders. But they can only do this once they are through reviewing their risk policies and ensuring the services are appropriate for younger users.

One important point the RBI lays emphasis on: under no circumstances should minor accounts, whether self-operated or managed by a guardian, be allowed to go into overdraft. That means these accounts must always maintain a positive balance with no loans or negative balances allowed.

As with all regular bank accounts, banks make sure they follow KYC rules at the time of opening and also maintaining accounts for minors. This includes thorough identity verification of minors at the time of opening and also ongoing checks over time. The KYC guidelines are a part of the RBI's Master Direction issued in 2016 and updated regularly. By July 1 2025, all banks need to confirm alignment of their internal policies with the updated rules of RBI.

Sources: 

• India Today
• NDTV