Mumbai: New rules pertaining to minors' deposit accounts have been published by the Reserve Bank of India (RBI). These are applicable to commercial and cooperative banks as well as all other regulated banking organisations.
Examining and streamlining current norms
To guarantee clarity, consistency, and ease of implementation for banks and customers alike, the RBI has reviewed and simplified previous regulations.
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Accounts Can Now Be Opened by Minors of Any Age
A parent or legal guardian may open a savings or fixed deposit account on behalf of a minor of any age under the updated rules. Interestingly, children can now open accounts with their mother, who serves as their guardian.
Self-Sustained Function Permitted starting at age 10
Youngsters ten years of age and up can now open and manage their own bank accounts on their own without a guardian.
Accounts Can Now Be Opened by Minors of Any Age
The updated guidelines state that minors must have a guardian. These regulations will go into effect on April 21, 2025.
No Overdrafts in Smaller Accounts
Banks are required to make sure that accounts operated by minors, whether by the child or guardian, never go into overdraft and always have a credit balance.
KYC requirements and continuous monitoring
For all small accounts, banks must perform customer due diligence (KYC) and Continue to keep a close eye on these accounts in accordance with legal requirements.
New Guidelines Following Majority
Banks are required to get updated specimen signatures and new operating instructions when a minor turns 18. The account balance needs to be checked and validated if the account was managed by a guardian.
Banks' Proactive Steps
To guarantee that all required formalities are finished on time, banks must take proactive measures and communicate with account holders who are getting close to becoming majority.
