The Reserve Bank of India (RBI) has rolled out updated norms governing the opening and management of bank accounts for minors. These revised regulations are applicable to all regulated banking institutions, including commercial and cooperative banks. The move aims to bring greater clarity, uniformity, and operational efficiency to minor account management.
Effective from April 21, 2025, the updated framework allows minors above the age of 10 to independently open and operate savings and term deposit accounts, marking a significant shift in banking access for young individuals.
As per the new norms, minors of any age can open and manage their savings or term deposit accounts through their natural or legal guardians. Notably, banks may also permit the mother of the minor to act as a guardian, even in the absence of legal documents stating guardianship.
Furthermore, for minors aged 10 years and above, independent operation of bank accounts is now permitted. This means children can not only open but also manage their bank accounts without guardian involvement—provided they meet the bank’s due diligence norms.
RBI has emphasized the importance of conducting comprehensive customer due diligence (CDD) when opening accounts for minors. Banks are required to validate all relevant documents at the time of account opening and continue ongoing monitoring of the account to ensure compliance with Know Your Customer (KYC) norms and other regulatory guidelines.
This process is especially critical for independently operated accounts by minors, where the risk factors are comparatively higher.
To protect minors from potential misuse or unintended liabilities, the RBI has clearly stated that all minor accounts—whether operated independently or through guardians—must always maintain a credit balance. Overdrafts or negative balances are strictly prohibited under the new framework.
This provision ensures financial discipline and safeguards the minor's interests while also protecting banks from credit risk.
Once a minor account holder turns 18, banks are mandated to obtain fresh operational instructions, including updated specimen signatures and a confirmation of the account balance. If the account was previously managed by a guardian, that authority ceases, and the bank must initiate formalities to transfer account control to the newly adult account holder.
Banks are expected to proactively communicate these requirements in advance to ensure seamless transition and compliance when minors become adults.
The RBI has instructed banks to undertake advance action by reaching out to minor account holders who are nearing their 18th birthday. This includes providing timely communication about documentation updates and account operation transitions.
Such proactive measures will help avoid service disruptions and ensure continuous access to banking facilities for young adults stepping into financial independence.
RBI's move to allow minors aged 10 and above to operate bank accounts independently represents a progressive shift in banking policy. It not only fosters early financial literacy but also aligns with broader efforts to increase financial inclusion among youth.
By ensuring safety, compliance, and autonomy, the central bank is setting a strong foundation for minors to begin their banking journey with responsibility and awareness.