RBI simplifies rules for minors’ accounts, recognises mothers as guardians; key details here

In a move to simplify and standardise rules across banks, the Reserve Bank of India (RBI) has updated its guidelines on the opening and operation of deposit accounts for minors. The revised rules aim to make banking more accessible and inclusive for young account holders and their families.

As per the new instructions given to all Commercial Banks, Primary (Urban) Co-operative Banks and State Co-operative Banks and District Central Co-operative Banks, minors of any age group can now open savings and term deposit accounts through their natural or legal guardians, including their mothers. This is a key clarification following past confusion where some banks hesitated to recognise mothers as guardians, especially when fathers were alive.

Additionally, minors aged 10 years and above can now open and operate savings or term deposit accounts independently, subject to limits and conditions set by individual banks. These conditions will be based on each bank’s risk policies and must be clearly communicated to the young account holders, RBI noted.

Earlier, banks were facing problems when mothers wanted to open bank accounts (like savings or fixed deposits) in the names of their minor children. Some banks were not allowing it, especially when the father was still alive. They referred to an old law (Hindu Minority and Guardianship Act, 1956), which says that only the father is the natural guardian in such cases.

However, this created difficulties for women and wouldn't help mothers from other communities like Muslims, Christians, or Parsis, even if the Hindu law was changed.

As per RBI, after discussing with the government, it has been decided that mothers can open savings or fixed deposit accounts for their minor children. But banks must ensure that:

1. The account is never overdrawn.

2. It always has a positive balance (in credit).

This way, there’s no legal issue, and the banks are protected.

3. All bank branches are now instructed to allow mothers to open such accounts for minors, with these safeguards in place.

The RBI’s move is expected to empower children to begin financial planning early while offering flexibility to families in managing accounts for their wards. Banks are now required to align their internal policies with these new guidelines to ensure smooth implementation.