The Reserve Bank of India (RBI) has permitted children bank accounts now.Yes,children can manage their bank accounts Independently.Although there was a provision for bank accounts for children earlier too but it was possible under the supervision of a guardian only.Earlier only a guardian was allowed to manage and operate the bank account and it was like a joint account.The latest RBI circular enables all the children above the age of 10 years to hold and manage their own bank account independently.
The rationale behind the move is the exclusive Financial Inclusion of children at an early age in the banking system.This is certainly going to help the children in understanding and managing their finances independently at much earlier phase of their life.Previously they were able to avail this facility only after getting aged 18 years.Children will have the access to all the services offered with a bank account like an ATM (Automated Teller Machine) Card,Internet Banking and Cheque Book.
Now its the time to educate your children about the basics of financial management.People may argue that we the parents are there to take care of that and let the children enjoy their time.But it is necessary that you do it earlier.The earlier the better.That will make them more responsible towards their finances in future.
Create the habit of savings in children.Teach them how the money grows with interest in bank accounts if they save their pocket money instead of spending on not so useful things.Make them understand the difference between Needs and Wishes.They should be made aware that by saving a penny today,they would be able to buy a more useful thing for them in future.You should also help them learning how to set up the financial Goals and how they can achieve these goals with financial management.
You need to keep vigil on the spending habits of your children.Financial independence is a good thing to have but it can be equally disastrous too if you leave it up to your children only.Though accounts are to be operated and managed by your children only,you should always be present as a guardian to your children and their finances.
Although children have the right to operate their bank account by their own,even then you would need to keep supervising them from time to time.Age of 10 and above till 18 years is such a tender age to manage the finances.In countries like India,it may be even more tough as the rate of ‘financial literacy’ is not much.The services provided in these children accounts shall be having some limitations regarding the cash amount in the account and the transactions in that account to insulate of any frauds .Even then you need to be vigilant and aware of the frauds that may happen to your children account,both offline as well as online.These frauds are on the rise day by day and you should keep educating your kids regarding this.
To make their banking more safe,tell them not to share their bank account details with their friends,school mates etc.Never disclose any ATM card number or Internet Bank credentials while surfing various websites on internet.Talk to the bank for keeping a cap on maximum amount in single transactions and limit down these transactions,both ATM and Online transactions.
Enquire carefully from all the banks before you open the account regarding the maintenance of minimum balance in the account.Go for account with minimum or zero balance accounts.You would never want that penalties kept on being slapped if minimum balance not maintained in the account.
The children bank accounts will definitely have positive impact in making children financial responsible and disciplined if kept under alert supervision of parents.Additionally it will give boost to banking system of the country also which don’t have much penetration till date and it is going to be good for economy in the long run.