In April 2025, Mumbai (Maharashtra)-based Reserve Bank of India (RBI) has issued revised directions regarding the opening and operation in the deposit accounts of minors. As per RBI directions, minors above the age 10 are now allowed to open and operate their own savings as well as term deposit accounts independently, subject to limits and terms defined by individual banks. These directions came into force from April 21, 2025.
- It has further permitted the banks to offer additional banking facilities like: internet banking, debit cards, cheque book facility, among others to minor accounts based on their risk management policies.
- Also, banks including, Commercial Banks (CBs), Urban Co-operative Banks (UCBs), State Co-operative Banks (StCBs) and District Central Co-operative Banks (DCCBs) have been directed by RBI to frame new or amend existing policies to align them with the revised guidelines, latest by July 01, 2025.
Key Points:
i.Opening of minor accounts under the age of 10: RBI has also allowed minors below the age of 10 to open their accounts subject to condition that it has to be done through his/her natural or legal guardian.
- It has further clarified that minors under the age of 10 years are now allowed to open such bank accounts with their mother as a guardian.
ii.Transition on attaining majority: As per new directions, banks are required to obtain fresh signatures and operating instructions from the account holder, on attaining majority i.e. 18 years.
- If the account was managed by a guardian, the balance must be confirmed.
- Banks are directed to take proactive action, including communicating these requirements to minor account holders attaining the age of majority, to ensure a smooth transition.
iii.No Overdraft Facility Allowed: It is mandatory for banks to ensure that accounts of minors, whether operated independently or through a guardian, are not allowed to be overdrawn and these always remain in a credit balance.
iv.Know Your Customer (KYC) Compliance Mandatory: Banks are required to perform customer due diligence while opening minor accounts and undertake ongoing due diligence, in line with RBI’s Master Direction(MD) on KYC, 2016.
Recent Related News:
According to article titled ‘State of Economy’ published by RBI in its March bulletin, net inflows from External Commercial Borrowings (ECBs) have surged over 2 times, to USD 18.4 billion in 10 Months (from April, 2024 to January, 2025) of Financial Year 2024-25 (FY25), against FY24, amid declining costs of overseas fund raise.
- As per RBI’s data, ECB outflows due to principal repayments reached at USD 23.9 billion in April 2024 to January 2025 period.
