RBI's New Rules for Minor Account:

The Reserve Bank of India has announced a revision to rules for opening or operating a minor account. RBI approved banks to enable minors over the age of ten to open and operate savings/term deposit accounts independently on April 21, 2025 . According to an RBI circular, minors of all ages may create and run savings and term deposit accounts through their natural or legal guardian.

All commercial banks and cooperative banks, including district central cooperative banks, state cooperative banks, and main (urban) cooperative banks, are subject to this regulation.

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What is a Minor Account?

A minor account is a savings account intended exclusively for children. A parent or guardian normally opens the account on behalf of the child, and the child can become the principal account holder once they reach a particular age, such as 18.

Benefits of Minor Account-

A minor account is a great approach to teach your child about financial responsibility. This bank account allows your youngster to learn how to operate a bank account, especially when finances are restricted.

This account teaches a youngster the importance of budgeting because there is a daily transaction restriction. Both the account's funds limit and minimum balance must be reached.

Some banks give free insurance for children when they open a bank account.

Banks may offer an auto sweep-in option that converts excess balances into fixed deposits, maximizing account earnings.

What is the New Update?

Minors over the age of 10 can now open a minor account upto the amount which is determined by the bank as per their risk management policy. If the terms are properly explained to the account holder, they might be allowed to open and manage savings or term deposit accounts on their own.

Banks need to update the operating instructions collect specimen signatures, and keep them on record once a minor reaches majority, as per the RBI circular.

Banks are free to provide additional banking services to minor account holders such as internet banking, ATM/debit cards, check book facilities, and so on, according to their risk management policy, product acceptability, and customer appropriateness.

In addition, banks must execute customer due diligence when opening deposit accounts for minors and continue to do so, according to the RBI. Such accounts will not be permitted to go into negative balance, regardless of who operates them. In other words, overdrafts will not be authorized in such accounts.

RBI requested banks that they can change current policies or create new ones for minor account as per the amended rule by July 1, 2025.

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Conclusion

The RBI's latest measure is a significant step toward increasing financial knowledge and empowerment among young Indians. By enabling youngsters over the age of ten to run savings and term deposit minor account independently, the RBI encourages early money management skills while also establishing the groundwork for prudent financial conduct from a young age. This update provides both opportunity and protection by enforcing strong requirements for security, transparency, and consumer due diligence. As banks prepare to implement these changes by July 1, 2025, young account holders have an amazing opportunity to take control of their financial future far earlier than ever before.