GUWAHATI: The Reserve Bank of India (RBI) issued revised guidelines on Monday, April 21, for banks concerning the opening and operation of deposit accounts by minors, to streamline existing norms. The new instructions follow a review of the current framework and are to be implemented by all banks by July 1.
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Under the revised framework, minors of any age may open and operate savings or term deposit accounts through a natural or legal guardian. This includes provisions for mothers to act as guardians, in accordance with a circular issued by the RBI on December 29, 1976.
Minors aged 10 years and above may open and operate savings or term deposit accounts independently, subject to terms and limits determined by banks based on their internal risk management policies. These conditions must be clearly communicated to the account holder.
Upon reaching the age of majority, banks are required to obtain fresh operating instructions and specimen signatures from the account holder. If the account had been operated by a guardian, the balance must be confirmed. Banks are expected to initiate communication and necessary actions in advance to ensure a smooth transition when the minor attains majority.
Banks may extend facilities such as internet banking, ATM and debit cards, and cheque books to minor account holders, provided these align with the bank’s risk management protocols and product suitability assessments.
Accounts held by minors—whether independently or through guardians—must not be overdrawn and must always maintain a credit balance. Banks are also required to carry out customer due diligence at the time of account opening and continue ongoing verification as per the Master Direction on Know Your Customer (KYC), 2016, as amended.
The revised guidelines have been issued under sections 35A and 56 of the Banking Regulation Act, 1949. Existing policies may continue until the effective date. All earlier circulars listed in the annexure to the current notification will stand repealed from that date.
