In the recent guideline by the Reserve Bank of India, minors above the age of 10 years are allowed to open and operate savings bank accounts independently, if they so desire.
A savings account or fixed deposit or recurring bank deposit account can be opened by a minor of any age through his/her natural or legally appointed guardian.
Most of the banks offer additional banking facilities like internet banking, ATM/ debit card, cheque book facility etc., subject to the safeguards that minor accounts are not allowed to be overdrawn and that these always remain in credit.
State Bank of India has come up with two accounts specially designed for kids called PehlaKadam and PehliUdaan.
Most of the features come with 'per day limits' to ensure that they spend the money wisely.
Some of the basic features of both the accounts:
- Interest at 4.00% p.a.calculated on a daily balance.
- Transferability of accounts to any SBI Branch without changing the account number.
- Nomination facility is available and recommended.
- Specially designed branded Passbook issued free of charge.
- Inter Core charges NIL for transfer transactions.
|Eligibility||Minor of any age. This account will be jointly opened with the parent/guardian.||Minors above the age of 10 years and who can sign uniformly. This account will be opened in the sole name of the minor.|
|Minimum Balance||No Minimum Balance requirement.|
|Cap on Balance||Rs. 5 lac in the Account • Rs. 10 lac aggregate deposit on the CIF of the Minor|
|Mode of Operation||Jointly with the Parent/ Guardian or Singly by Parent/ Guardian||Singly operated|
|Internet Banking||With Enquiry rights and limited transactions like - Bill payment, Opening e-TDR/e-STDR/e-RD, Inter-Bank funds transfer (NEFT only), and Issue Demand Draft. Per day transaction limit of Rs. 5,000/-||With Enquiry rights and limited transactions like - Bill payment, Opening e-TDR/e-STDR/e-RD, Inter-Bank funds transfer (NEFT only), and Issue Demand Draft. Per day transaction limit of Rs. 5,000/-|
|KYC Requirements||Date of Birth proof of the Minor + KYC of the Parent||Date of Birth proof of the Minor + KYC of the Parent|
|Cheque book||Specially designed Personalised chequebook (with 10 cheque leaves) will be issued to the Guardian in the name of minor u/g guardian.||Specially designed Personalised chequebook (with 10 cheque leaves) will be issued if the minor can sign uniformly.|
|Photo ATM-cum-Debit Card||Child's photo embossed ATM-cum-Debit Card with withdrawal/POS limit of Rs. 5,000/. Card will be issued in the name of the minor and Guardian.||Photo embossed ATM-cum-Debit with withdrawal/POS limit of Rs. 5,000/- will be issued in the name of the minor.|
|Mobile Banking||With viewing rights and limited transaction right like: Bill payment, Top ups. Per day transaction limit of Rs. 2,000/-||With viewing rights and limited transaction right like - Bill payment, Top ups, IMPS. Per day transaction limit of Rs. 2,000/-|
|Auto sweep||Auto sweep facility with a minimum threshold of Rs. 20,000. Sweep in multiple of Rs 1,000 with a minimum of Rs. 10,000|
|Over Draft for Parents/Guardians||Overdraft against Fixed deposits for parent/guardian or two months' salary in case of Corporate Salary package accounts as the case may be subject to fulfilling other terms and conditions.||No overdraft facility under this product|
|Standing Instruction||An option of setting up of one Standing Instruction for Recurring Deposit, free of charge.|
Should You Open?
The only reason one can open this account is that it might help to inculcate the habit of savings in children at a young age.
Beyond this you may have to maintain a minimum balance, apart from the hazard of maintaining another account. Go for it only if you want to form a savings habit in your children.