Yes, any minor below the age of 18 years can have a minor bank account. If a child is below ten years old will have a savings account with their parent or guardian as the joint account holder.
Minor Savings Account - Meaning, How to Open & Benefits
Becoming a parent comes with a lot of joy as well as responsibilities. Parents do their best to inculcate good values and ensure their child gets a good education. Educating your children about healthy financial habits is equally important.
Generally, parents do this by making their children aware of the importance of savings. In this regard, opening a minor savings account can be a good start. Continue reading this guide to learn more about the same.
What Is a Child Savings Account?
Parents can open a minor savings account for their kids below eighteen. Once opened, children can deposit and withdraw money from this account just like a usual savings bank account. The children and the parent or guardian are joint holders of a minor savings account. After a child turns ten, they can become the sole owner of this bank account.
After ten years of age, the child will get a cheque book from the bank and a debit card to withdraw money. Nevertheless, the guardian/parent can set an upper limit for the withdrawal amount. Further, after eighteen years of age, one can convert it into a regular savings account or completely close it.
The interest rates and minimum required balance for a minor savings account tend to vary from bank to bank. However, generally, the interest rate ranges from 4% to 6%.
How to Open a Savings Account for Kids?
1. Online process
Step 1: Visit the official website of a bank with which you have a regular savings account.
Step 2: Fill up the minor savings bank account application form properly with all the necessary details.
Step 3: Enter your child's name as the primary account holder and the guardian's name as a joint account holder.
Step 4: Submit all the documents as asked by the bank and submit the application form.
After successfully verifying all the details and the documents provided, the child savings account will be opened.
2. Offline process
Step 1: Visit the nearest branch of a bank with which you already have a regular savings bank account.
Step 2: Carefully fill out all the minor savings bank account application form details. Specify your child as the primary account holder and the guardian as the joint account holder.
Step 3: Submit all the child's documents, as asked by the bank.
Step 4: You will have to fill out a separate form as the parent or guardian.
Step 5: Following this, you will have to provide the minor's address proof.
Step 6: Finally, the bank representative will ask you to provide your signature for all future transactions.
After the bank verifies all the information and documents, a bank account will be created and you will receive all the bank account-related documents and a chequebook.
What are the Documents Needed to Open a Child Savings Account?
Here are the documents required to open a child bank account in India:
- Birth certificate of the minor (to assess the relationship with the joint holder)
- PAN card details of parent
- Minor’s address proof
- Parent/guardian’s signature (for future transactions)
- Parent/guardian’s photograph
However, these documents can vary from bank to bank.
What Are Minor Bank Account Rules?
The rules of a minor bank account are as follows:
- Children (both Indian residents and NRIs) under eighteen years old can apply for an account
- If a minor is below ten years of age, the parent or guardian shall be a joint holder for the minor bank account
- Children above ten years of age have an option of opening an account solely in their name and can operate the account independently
What are the Benefits Of Child Saving Account?
Some of the beneficial aspects of opening a minor savings bank account are as follows:
- With the help of this savings account, children can understand the importance of saving and utilising the funds when needed. They can deposit their gift money and allowances to save money for the future.
- A minor savings bank account enables a child to understand the importance of managing finances at a young age. With an account, a child learns how to budget, plan and handle money efficiently.
- The urge to spend money impulsively reduces when a kid learns to save. This good value will help them in the later years of their life.
- Further, the interest and growing principal amount in a bank account help kids understand compounding. Hence, kids will try to save more money dedicatedly and gather wealth as they grow older.
Following all the above-mentioned information, parents can teach good financial habits to their kids and open a minor savings account. This will allow them to understand the importance of managing and saving money which will benefit them in the long run.
FAQs about Minor Savings Account
Yes, a parent/guardian can withdraw money from a minor bank account. However, when a child turns ten, they can opt to operate a savings bank account independently.
Children above fifteen with a single bank account are eligible for all UPI transactions. Those below fifteen years old and the joint holder cannot use UPI.
Yes, interest acquired clubbed with the parent's or guardian's income is taxable under Section 64 (1A) of the Income Tax Act of 1961.
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