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    Thinking about opening a bank account for your child? Here's why you should do it

    Ashika Kumar Ashika Kumar 4 Mins Read

    Ashika Kumar Ashika Kumar

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    Written For ParentCircle Website new design update

    Does your child have a piggy bank to store stray coins? It's time to upgrade and open a bank account for her. Read on to know more

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    Thinking about opening a bank account for your child? Here's why you should do it

    Children, especially very young ones, have no concept of money. Even older children may not be able to entirely grasp the idea of how their parents earn and spend money for the family. To truly appreciate the fruit of labor, children need to be educated about where the money comes from and where it goes. This can be done through a gentle introduction to domestic finance. From early on, children should be taught that everything from their clothes, toys, school fees, food and even the occasional treats cost money.

    Why is it important to open a bank account for your child?

    The very process of entering a bank, filling out a form and interacting with bank personnel like an adult is an experience that children will cherish. And when older children begin operating their accounts, the concept of money stops being something abstract and becomes real. They see that the pocket money that they had painstakingly, and with much sacrifice, squirreled away has now grown into a much bigger figure.

    This lesson of delayed gratification will serve them well as they grow into adults be it saving for a rainy day, training for a marathon or even understanding that relationships, like money, take time and effort to grow.

    Impulsive spenders and shopaholics are not born, they're made. It's easy for our children to get lured by the jazzy world of commercialization. As our children are growing up seeing credit cards more than hard cash, we must teach our children the value of money. They must learn to save and invest their hard-earned money wisely. But, as parents, we must remember that it is better to practice than preach as children learn more by observing.

    Here are some tips to open a bank account for your child:

    Who can open an account?
    • As per the Reserve Bank of India (RBI), even infants can have bank accounts opened in their names by their natural or legal guardians. However, experts opine that the best age to open a bank account for children is after the age of four.
    • Children over the age of ten are allowed to open and operate their own savings accounts (with access to ATMs). However, banks have the discretionary power to set limits on the age as well as the amount of money minors can operate.
    • A minor can open an account jointly with his natural guardians.
    • A legal guardian of the minor can open an account in his name.


    Documents Needed
    • Birth certificates of the child
    • KYC (Know Your Customer) documents, government-approved identity and address proof (such as passports, driving license, PAN cards, bank account statements) of the parent or guardian
    • Aadhar card of the minor
    • If the child is 10 years and above, his specimen signature will be required by the bank
    • For children below 10 years, a guardian specimen signature will be needed to open the account

    Keep a tab

    • Banks have set maximum daily transaction limits to keep a tab on the transactions for children's accounts.
    • As a parent, you also have the option of putting additional transaction limits on your child's account.

    Minors to majors

    • If your child has a bank account in her name, the minor account can be converted to a regular savings account, once she becomes a major.
    • For this, she has to provide her specimen signatures along with the KYC documents. The parent/guardian's name is removed from the account.

    Sukanya Samriddhi Yojana

    As part of the Beti Bachao Beti Padhao (Save Daughter, Educate Daughter) campaign, the Government of India has launched the Sukanya Samriddhi Yojana for girl children under the age of ten. Here, parents can open a bank account in their daughter's name (limited to two daughters per family) in any one of the several appointed banks.

    To encourage parents to utilize this scheme, the government offers a tax rebate under Sec 80C; the minimum deposit is only ₹250 and thereafter any multiples of ₹100 with a maximum limit of  ₹1.5 lakh in a financial year.

    As a parent, the onus of identifying needs from wants rests on us. As our children see us make judicious choices, save money for important expenses and focus on running the house on a budget, they will automatically mimic us. This way we can successfully create a generation of hard-working individuals who spend wisely and save naturally.

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