RBI Introduces New Rules Allowing Minors Above 10 to Independently Operate Bank Accounts

In a significant policy update, the Reserve Bank of India (RBI) has allowed minors aged 10 years and above to independently open and operate savings and term deposit accounts. The new guidelines are part of a broader revision aimed at simplifying and consolidating rules related to minors’ banking access.

According to the circular issued by the central bank on Monday, “Minors of any age may be allowed to open and operate savings and term deposit accounts through his/ her natural or legal guardian.” However, under the revised regulations, children who are 10 years or older can choose to operate these accounts on their own.

The new provisions are applicable to all commercial banks, as well as cooperative banks—including primary (urban) cooperative banks, state cooperative banks, and district central cooperative banks.

Banks to Frame Their Own Guidelines

Banks have the discretion to create specific guidelines for minor-operated accounts, aligned with their internal risk management frameworks. These guidelines may include limits on deposits and services offered, which must be transparently communicated to minor account holders.

Despite the autonomy granted to older minors, banks must adhere strictly to Know Your Customer (KYC) norms as per the RBI’s Master Direction on KYC (initially issued in February 2016 and periodically updated). This includes initial verification during account opening and regular compliance checks thereafter.

No Overdrafts or Loans Against Minor Accounts

The RBI has made it mandatory that accounts opened by or for minors must not fall into overdraft. In simple terms, these accounts should always maintain a positive balance and cannot be used to secure loans.

Banks may offer additional services such as ATM or debit cards, cheque books, and internet banking for minor-held accounts, but only after evaluating their suitability under the bank’s risk assessment framework.

Transition to Adulthood

When a minor reaches 18 years of age, they must provide updated operating instructions and a fresh specimen signature. In cases where a guardian previously managed the account, the bank must verify the account balance before transferring full control to the account holder.

Deadline for Implementation

All banks have been instructed to update or formulate their internal policies to align with these new guidelines by July 1, 2025.