Important rules related to bank account of a minor

A savings /fixed / recurring bank deposit account can be opened by a minor of any age through his/her natural or legally appointed guardian. Banks in India have the freedom to fix the minimum age at which they will allow a minor to operate his account in a single name. As a result, a minor can open and operate a bank account alone in India. Banks usually at their discretion fix a maximum limit of the amount such minors can have at their disposal through their account. As of now, a minor above 10 years of age can open his/her single name and operate the account with up to a certain limit of the amount fixed by the banks. However, a minor’s account should always be in credit balance and banks will not allow a minor’s account to be overdrawn. As per the RBI notification, banks are permitted to offer additional facilities like internet banking, ATM, and debit card facility besides checkbook facilities to minors.

How long do the accounts remain as ‘minor accounts’?

Upon a minor attaining majority he or she can withdraw the balance of funds in his/her account and the right of the guardian to operate the account on behalf of the minor will automatically cease. The natural guardian is allowed to operate the account after the minor attains majority only in case of the natural guardian is the joint holder of the account.

What to do when a minor attains majority?

A minor for whom a guardian is appointed by a Court attains majority only on completion of Twentyone years. Otherwise, he/she is deemed to be major on completing Eighteen years of age.

On attaining majority, the erstwhile minor should confirm the balance in his/her account and if the account is operated by the natural guardian / legal guardian, fresh operating instructions and specimen signature of the erstwhile minor should be obtained and kept on record for all operational purposes.

Who else can open and operate a minor’s account?

The minor’s accounts can be opened by the natural guardian (Father or Mother) of the minor or a joint account in the name of the natural guardian and minor payable to either or survivor. The account can also be opened on behalf of the minor by a person appointed by the court (In this case, guardianship certificate must embody an express authority to open and operate an account with the bank). The bank accounts of minors are opened in the form of SB/RD/Term deposits.

Whether mother can be a guardian when the father is alive?

Section 6 of the Hindu Minority and Guardianship Act, 1956 stipulates that the father alone should be deemed to be the guardian while the father is alive. Many a time, mothers of a minor find difficulty in opening an account in the name of their minor child, to be operated by themselves as guardians when the father is alive. Notwithstanding the above legal provisions, banks are allowed to open a minor’s account by the mother as guardian, provided the minor’s accounts are not allowed to be overdrawn.

What happens in the event of the death of the guardian?

In the event of the death of the guardian, before the minor attains majority, the balance in the account would be payable to the minor on his /her attaining majority. In such cases, some other person appointed by a competent court, acts as the guardian of the property of the minor or trustee, till the minor attains majority.

Are any special documents needed to open minor accounts?

Individual Banks can decide and frame a rule regarding what kind of documents will be needed to open accounts for minors.

Originally posted on July 19, 2014, edited and reposted on March 23, 2023