Now, independent bank a/c for minors

NO parental guidance required for above 10-year-olds

The Reserve Bank of India (RBI) has allowed minors above the age of 10 to open a savings bank account independently. Till now, minors could open such accounts only with their mothers as guardian.

"Minors above the age of 10 years may be allowed to open and operate savings bank accounts independently, if they so desire," the central bank said, adding the move was aimed at promoting the objective of financial inclusion and also to bring uniformity among banks in opening and operating minors' accounts.

RBI said banks were free to offer additional banking facilities such as internet banking, ATM/debit card, cheque book facility, etc, subject to the safeguards that minor accounts were not allowed to be overdrawn and that these always remain in credit.

K R Kamath, chairman and managing director of Punjab National Bank, said many children were quite adept at operating computers and could use debit cards. So allowing them to operate accounts independently with certain safeguards was an apt step for spreading financial services.

Banks are free to fix limits in terms of age or amount that a minor can withdraw or deposit independently. Lenders are also free to decide the minimum documentation that is needed for opening such accounts.

"Banks may, however, keeping in view their risk management systems, fix limits in terms of age and amount up to which minors may be allowed to operate the deposit accounts independently," the circular added.

Apart from this, a savings, recurring or a fixed deposit account can be opened by a minor of any age under the guardianship of parents.

Separately, RBI also said banks could not levy penalty on customers for non-maintenance of minimum balance if the account was inoperative.

"It is advised that henceforth banks are not permitted to levy penal charges for non-maintenance of minimum balances in any inoperative account," RBI said.

In the monetary policy last month, RBI had advised banks to refrain from charging a penalty. "Banks should not take undue advantage of customer difficulty or inattention. Instead of levying penal charges for non-maintenance of minimum balance in ordinary savings bank accounts, banks should limit services available on such accounts to those available to basic savings bank deposit accounts and restore the services when the balances improve to the minimum required level," RBI had said.

Banks generally charge a penalty on dormant accounts or for non-maintenance of the minimum balance which in the case of private sector banks could be as high as Rs 10,000.

However, banks believe that this might increase the cost for bankers and as a result consumers might end up paying more for other services such as cheque books, ATM withdrawals etc.

Aditya Puri, managing director, HDFC Bank, had earlier said, "The consumer will end up paying more in the alternative. Let us say the minimum balance is Rs 10,000 and we earn four per cent on it. For Rs 400, we give you cheque books for the full year, ATM transactions, the account balance and statements. Break-even for the bank to provide those services is Rs 30,000."

"If you have consumer interest in mind, you will not push this because the alternative is, then you are charged for these services. If I start charging you for these, you will end up paying more. It is implied that if you don't charge on non-maintenance of minimum balance, you are authorised to charge on the transaction," Puri added.