SBI to launch children's savings a/c in 3 months

Earlier this week RBI allowed minors above 10 years to operate savings a/c independently, but left it to banks to fix age and amount caps

Following the Reserve Bank of India (RBI)’s move to allow minors aged more than 10 to open and operate savings bank accounts independently, the State Bank of India (SBI) on Thursday said it would start a special scheme for children soon.

“We do open accounts for children, but we have restrictions on overdrafts. This is because if there is overdraft, we won’t be able to realise it. However, there is no restriction on deposits. We are going to launch a special scheme for children in the next three months,” SBI Chairman Arundhati Bhattacharya told reporters on the sidelines of a banking seminar organised by the Indian Merchants’ Chamber.

SBI wouldn’t issue cheque books for such savings bank accounts, she added.

RBI has said for accounts for minors, banks can decide the age criterion and the amount up to which minors can be allowed to transact. It had added banks were free to offer additional facilities such internet banking, ATM (automated teller machine)/debit cards, cheque book facility, etc, subject to the conditions these accounts weren’t overdrawn and always had a certain balance.

On RBI’s directive to stop charging pre-payment penalties on floating-rate loans, Bhattacharya said as SBI didn’t have any such charges, there would be no impact on its margins. She added the bank charged foreclosure fees on fixed-rate term loans.

On the priorities before the new government, the SBI chief said it had to contain inflation on a priority basis and take steps to revive the investment cycle. It had to engage with state governments for building consensus on implementing various policies on land acquisition, etc, she added.

On lending models for commercial loans, she said there was a limit to asset-backed lending, as was the case with infrastructure financing. Banks would have to consider experimenting with cash-flow-analysis-based funding to farmers and small and medium enterprises.