Now, special scheme for children's accounts in SBI

No longer piggy banking?

RECENT Reserve Bank's directive to all banks to allow minors to open and operate accounts is likely to have a sea change in the banking operations in the country. Now, India's largest lender State Bank of India (SBI) has said it will start a special...
scheme for children shortly. SBI chairperson Arundhati Bhattacharya has said that though SBI opens accounts for children, the PSU bank have restrictions on overdrafts. Since children are not financially independent such accounts have their own limitations. In case of children's accounts, there is no restriction on deposits.
She said SBI will launch a special scheme for children in the next three months.
The RBI last week issued guidelines allowing minors over 10 years to operate bank savings accounts independently and use facilities such as ATMs and cheque books. So from now onward, the children who are above 10 years no longer will require their parents' aid to open accounts. Hitherto, banks allow minors to operate bank accounts only along with a parent or a guardian. All children below the age of 18 are considered minors under current rules. The Central bank also allowed banks to offer additional facilities like internet banking, ATM, debit card to a minor. However, RBI said that such facilities should be within the overall norms that banks will not allow a minor's account to be overdrawn and that these accounts should always remain in credit.
However, RBI has given the leeway to banks to fix the minimum age at which they will allow minors to operate savings bank accounts independently.
RBI said the move was aimed at promoting financial inclusion and bringing uniformity in opening of such accounts in banks. Minors were previously allowed to open fixed and savings deposit accounts with mothers as guardians.
"Banks are free to 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," the RBI had said.
In another customer-friendly move, the regulator asked banks to stop penalising borrowers for foreclosing their floating-rate loans.
"It is advised that banks will not be permitted to charge foreclosure charges or pre-payment penalties on all floating-rate term loans sanctioned to individual borrowers, with immediate effect," the RBI said. Floating loan products include housing, corporate, vehicle and personal loans.