Winning Bizness Desk

Mumbai. In a significant move aimed at promoting financial literacy and independence among young individuals, the Reserve Bank of India (RBI) has allowed children aged 10 years and above to independently open and operate savings or term deposit accounts. This step marks a departure from previous norms where such accounts could only be opened and managed by parents or legal guardians. The RBI has instructed banks to frame or update their policies in line with this directive by July 1, 2025.

Banks to Frame Risk-Based Guidelines

While the RBI’s notification empowers minors, banks have the authority to create risk-management policies that define specific conditions for these accounts. Banks can decide on withdrawal and deposit limits and set restrictions on the maximum amount that can be withdrawn in a single transaction. Each bank can create its own framework based on its assessment of risk and security for minors operating accounts independently.

Access to Digital Banking Services

Children operating accounts will also be eligible to receive banking services such as internet banking, ATM/debit cards, and even checkbooks, depending on the policies set by the bank. However, the availability of these services will be governed strictly by the risk parameters laid out by individual banks. These features aim to help children gradually adapt to digital banking under controlled environments.

Transition at Age 18

Upon turning 18, the account holder will be required to submit new signatures to continue operating the account independently. If the account was earlier managed by a guardian, the balance will be verified and the ownership fully transferred to the now-adult account holder. The bank will also inform the customer of any new terms and conditions applicable to adult accounts.

ATM Withdrawal to Get Costlier from May 1

In a related update, the RBI has revised ATM withdrawal charges, effective from May 1. Customers will now have to pay ₹19 for each additional cash withdrawal beyond the permitted free limit, up from the previous ₹17. This ₹2 increase per financial transaction is expected to impact frequent ATM users. The RBI clarified that this move was made to align operational costs and inflation.

Know This in Nutshell:

1. Children aged 10+ can now open and operate bank accounts independently.

2. Banks can set deposit and withdrawal limits under their own risk policies.

3. Facilities like debit cards, internet banking, and checkbooks may be offered.

4. RBI has asked banks to implement these policy changes by July 1, 2025.

5. New signatures will be needed when a child account holder turns 18.

6. Guardianship control over the account ends at the age of 18.

7. ATM withdrawal fees will increase to ₹19 per transaction after May 1.