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Considering starting a savings plan for your youngster but unsure of the process? Discover the straightforward method of setting up a open a bank account for a minor in India.
The journey of parenthood is undeniably challenging. Along with the countless moments of joy and happiness, it comes laden with significant duties. While parents endeavor to impart worthy values, principles, and ethics to their offspring from an early age, financial responsibility is often neglected. Educating children about fiscal discipline and sound financial practices is equally vital for their growth and future achievements.
The path to fiscal discipline, for both a child and an adult, begins with establishing a savings account for consistent deposits. Initiating a savings account for your kid will foster their understanding of monetary mechanics and growth. In the current age, numerous well-known banks offer savings account services for minors, simplifying the process for parents to set up their children’s accounts. Examples include ICICI Bank’s Young Stars Account, State Bank of India’s PehlaKadam and PehliUdaan, HDFC Bank’s Kids Advantage Account, and Union Bank of India’s own offering presents its Youth Banking Accounts.
Process to Open a Bank Account for a Minor in India
In this piece, we present a comprehensive guide on how to open a minor’s bank account in India.
Points to Confirm Prior to Establishing a Minor’s Account
Bank accounts for minors are often characterized by limitations. Not every feature of a regular account can be accessed. If you’re contemplating initiating an account for a minor, there are several elements you may need to discuss with your bank beforehand.
1. Age Criteria
Typically, banks provide two distinct types of savings accounts for minors. One is designated for children under 10 years old, and the other is for those in the 10-18 years age bracket. If your child is under 10, the account must be jointly managed by the parent/guardian. However, if your child is over 10 years old, the child can directly operate the account.
2. Minimum Required Balance
Banks often necessitate a certain minimum balance to open these accounts, which can range from Rs.2500 to Rs.10,000. Before setting up an account, ensure that maintaining this balance is feasible for you to evade potential future issues.
3. Spending Limits
It would be prudent to confirm the monthly and yearly spending caps for the account with your bank. These vary across banks. Some banks have a daily withdrawal limit of Rs.1000, while others have a limit of Rs.5000. Certain banks also enforce an annual debit cap for minor accounts. Clearing up these details beforehand is recommended.
In addition, it would be useful to confirm whether a debit card and cheque book would be issued for the minor account and, if so, who is authorized to use them.
4. Funds Transfer Options
Ascertain whether inter-bank funds transfers are permissible on the minor account. Also, verify that the bank offers a ‘standing instructions’ feature to enable funds transfer from the parent’s account to the child’s account.
5. Bank Communication
Ensure that the bank effectively relays all transactions made using the minor account. Activate SMS alerts and also request the bank to send monthly e-statements via email.
Documents Required
This article outlines the necessary documents needed to open a bank account for a minor in india:
- Proof of Identity: Identification of both the minor and the parent are required. Aadhaar Card, Passport or Driving license are acceptable forms of ID.
- Recent Photos: Current photographs of the minor are needed. Certain banks might also request parent’s pictures.
- Proof of Address: Documents showing the residential address must be provided. These can be Electricity bills, gas bills or the Aadhaar card.
- Relationship Documents: Evidence demonstrating the relationship between the parent and the minor must be presented. This could be a Passport, Ration Card or Life Insurance policies.
- Birth Date Proof: Documentation affirming the minor’s date of birth is needed. A Birth certificate or Aadhaar card could be used for this.
Process for Opening Savings Account for a Minor
Here’s a step-by-step guide on how to open a bank account for a minor in India:
- The majority of banks stipulate that parents have a savings account with the bank where they plan to open their child’s account. You need to create one if it doesn’t exist already.
- Complete a form provided by the bank, designating the child as the primary account holder and yourself as the co-account holder. Append all necessary photographs to this form.
- Provide all the identification documents demanded by the bank. It might be necessary to supply PAN card details too.
- Verify that all signatures are accurately placed. Review your application for any typographical errors before submitting it to the bank.
- Following your application’s receipt, the bank verifies the details, and the account is established.
- Upon account creation, the bank will furnish all the relevant account documents. You may also receive a cheque book and a passbook.
- That’s how a minor’s account is opened in India.
Once the minor account is active and operative, you can conduct all transactions that the bank permits. This account remains operational until the child turns 18. Post the child’s 18th birthday, the account will automatically stop functioning, necessitating its conversion to a regular savings account if you wish to make withdrawals.
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