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Minor Children. Major Account-holders.

Long time ago, in 1976, RBI permitted banks to open Savings and Fixed Deposit accounts in the names of the minor children (i.e. those below the age of 18 years), provided that
a) the mothers were the guardians and
b) such accounts always remained in credit i.e. overdrawing was not allowed.

Thirteen years later, in 1989, this facility was extended to the Recurring Deposits.

Now, after a 25-year leap, RBI has announced many relaxations to the minors' bank accounts.

Firstly, bank accounts (savings, fixed deposits and recurring deposits) can now be opened in the name of the minor, of any age, along with his / her "any natural or legally-appointed guardian".

The path-breaking change, however, is that minors of age above 10 years can henceforth open and operate Saving Accounts "independently". In other words, they no longer require a guardian for a Savings Account. Besides, banks are free to offer internet banking, cheque book, ATM / Debit Card and such other additional banking facilities too to such accounts (subject, of course, to the safeguard that such accounts always remain in credit).

In addition, banks can frame their own rules with regards to age, amount, documents, etc. with respect to the deposit accounts that can be independently operated by such minors of age above 10 years.

When the minors mature,
- the balance in their account should be confirmed in cases where the minors were operating the accounts independently, and 
- fresh operating instructions and specimen signature of the erstwhile minors should be obtained where the guardian had been operating the account.

A great initiative indeed by RBI Governor Dr. Raghuram Rajan to promote financial literacy from the very early age itself.

This blog, which actively works towards 100% Financial Literacy, welcomes this step of RBI wholeheartedly.

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