Parents often open bank fixed deposit accounts to secure their children’s financial futures. Some prefer recurring deposit schemes to save money in installments.
These parents, driven by a strong sense of responsibility, plan so their children can save a substantial amount for higher education, marriage, and other future needs while they are still young.
Understanding the rules for opening fixed deposits in the name of minors is crucial for parents. But what if a child does not have a PAN card? What steps can be taken?
Specific guidelines apply to establishing a fixed deposit account in a minor’s name. First, the account must be opened in the same bank where the parents already hold an account. These rules are generally consistent across most banks.
According to the HDFC Bank website, parents must already possess a savings account at that bank and have completed the Know Your Customer (KYC) process to open a savings account for a minor.
Parents must provide the necessary documentation to open a bank account in a minor’s name, though the specific documents required can vary from one bank to another.
As outlined in a circular dated May 6, 2014, by the Reserve Bank of India (RBI), banks are encouraged to set age and cash limits on minors’ ability to operate accounts independently based on their risk management systems.
Additionally, parents can be reassured that banks have the discretion to make the final call on the required documentation for opening a minor’s account.
This flexibility ensures that the system can adapt to their specific needs. There are two types of accounts available for minors:
The first type is the Self-operated savings accounts for children aged ten and above, which allows them to manage their accounts independently. The second type is the Accounts operated by a parent or guardian for children under 10.
Accounts operated by a parent or guardian for children under 10. KYC is mandatory for both types of accounts. The primary distinction lies in who has the authority to operate the account.
Parents can open a fixed or recurring deposit account based on their child’s age, allowing them to choose the best option and begin making deposits accordingly.