Social ,22 Apr 2025

RBI Permits Minors Above 10 Years to Operate Bank Accounts Independently

In a progressive move aimed at fostering financial literacy and inclusion among the younger generation, the Reserve Bank of India (RBI) has now allowed minors above the age of 10 to independently operate their savings bank accounts. This decision is a step forward in empowering young individuals to manage their own finances and understand banking services from an early age.

 

What Has Changed?

Previously, while banks could offer savings accounts to minors above 10 years of age, these accounts were largely under the guardianship or supervision of parents or legal guardians. With the new guidelines, the RBI has clarified that minors aged 10 and above can independently operate their accounts, including withdrawals, deposits, and digital transactions, subject to certain safeguards and bank policies.

 

Objectives Behind the Move

This regulatory change is part of a broader RBI initiative to promote:

1. Financial literacy among children and adolescents
2. Early adoption of digital banking habits
3. Inclusion of younger age groups into the formal banking ecosystem
4. Responsible money management practices from a young age

 

What Does Independent Operation Include?

Minors who are 10 years or older will now be able to:

1. Operate their own savings bank accounts
2. Use ATM/debit cards
3. Access internet and mobile banking with appropriate limits
4. Receive direct benefit transfers and other credits
5. Perform cash deposits and withdrawals independently

However, banks may still apply restrictions based on:

1. Maximum balance limits
2. Transaction caps
3. Parental consent in certain cases
4. Risk assessments and KYC norms

 

Benefits of This Policy Shift

1. Financial Empowerment of Youth

Young account holders will gain hands-on experience in managing their finances, budgeting, and saving.

2. Increased Financial Literacy

With access to real banking tools, minors will be able to understand the basics of interest rates, digital transactions, and money management.

3. Boost to Digital Banking

As digital payments rise, this move helps minors become comfortable with digital wallets, UPI, and online banking.

4. Encourages Saving Habits

Regular interaction with banking services will likely encourage children to save regularly and plan expenses.

 

Safeguards and Responsibilities for Banks

While this is a positive step, the RBI has also emphasized the responsibility of banks to ensure:

1. Proper due diligence while opening accounts
2. Age-appropriate digital banking limits
3. Monitoring for unusual or high-risk activity
4. Parental notifications for specific transaction types (if opted)
5. Education and awareness materials tailored to young customers

 

How This Impacts the Banking Sector

For Banks:

1. Opportunity to build early customer relationships
2. Scope for offering custom youth banking products
3. Supports long-term customer retention strategies

For Fintechs:

1. A new segment to create gamified saving apps and educational platforms
2. Innovation in teen-focused neobanking and prepaid instruments

For Parents:

1. A chance to teach financial discipline with real-world tools
2. Option to supervise while allowing independence

 

Global Context

Countries like the USA, UK, and Australia already allow minors to operate youth banking accounts with tailored features. India's latest move brings its regulatory stance in line with these global standards, reinforcing its commitment to financial inclusion and education.

 

Conclusion

RBI’s decision to allow minors above 10 years to operate their bank accounts independently is a landmark step toward nurturing financially responsible citizens from a young age. It opens the door to deeper engagement between the youth and financial institutions, encouraging a generation that is digitally savvy, financially literate, and inclusion-focused.

As banks begin to roll out these changes, the focus will be on ensuring safety, awareness, and structured support to make this transition smooth and beneficial for all.