The opening of accounts for the minors was in practice for many years. However, previously the accounts were started with mother as the guardian. The operation of the accounts was handled by guardian. The savings, deposit and Recurring Deposits each account type was permitted. However, there was no scope for individual account for the kids. With the new ruling from Reserve Bank of India (RBI) that restriction is withdrawn. The new directive from the RBI is allowing the children above ten years to open account in different national and private sector banks across the country. The process of operating of the Bank account is conducted independently without indulgence of their parent.
The reason of the change
The chairperson of an acclaimed nationalized bank stated that present generation of children is quite apt in using the varied technologies developed. They are user-friendly with technologies of computer and internet. Moreover, many of them are having accounts under guardianship. The smart generation is capable of handling their money. Thus, this new initiative is taken by RBI. It is directed that the accounts will be free of penalty in case of non-operative mode. However, overdrafts cannot be taken from this account type. Furthermore, there will be a limit on withdrawal for each month. The withdrawal amount will depend on individual banks.
The services designed for the minors
The account opening is not the only service that will be presented by the banks. There are other services included in the list. The aspect of internet banking will be activated for minor accounts. The cheque books will be issued and the children will even receive the facility of ATM or Debit card. However, there safety rules depicted to protect the interest of the accounts. The facility of involving a guardian in handling of the account is kept active. The same account can be used by the customer after attaining majority. However, she or he has to resubmit the KYC or Know Your Customer Form to keep the account active.
The aspect of safety
The main frame of safety measure is the KYC forms. The banks are quite strict about submission of this form. It ensures the legal validity of the customer to open and operate an account. The banks take in-depth measures in ensuring that each account is valid. Moreover, the depositing amount in the account is restricted. However, no fine can be levied for non-maintenance of the minimal amount in the account of a minor. Many banks are considering this as a positive step. However, some are worried about the non-chargeable aspect for the non-operative accounts. The bank personnel stated that this will increase the cost of the other services that are presented to the customers.
The other aspects
Many banks have already started their minor account services. This new directive will make the younger generation more inclined towards the banking sector. It also induces the aspects of saving and investment in the young ones. Moreover, it is a nice way to introduce children to the necessity of responsible spending. Many pare