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Following the Reserve Bank's move to allow minors to open and operate accounts, the State Bank of India, the nation's largest lender, on Thursday said it will start a special scheme for children shortly.

"We do open accounts for children but we have restrictions on overdrafts as if there is overdraft, we would not be able to realise it. There is no restriction on deposits, though. And we are going to launch a special scheme for children in the next three months," SBI Chairperson Arundhati Bhattacharya said.

On the impact of the RBI asking banks to stop charging pre-payment penalty on floating-rate loans, she said SBI does not have any such charges, hence there would be no impact on margins for long. She added that the bank charges foreclosure fees on fixed-rate term loans.

The RBI on Tuesday issued guidelines allowing minors over 10 years to operate bank savings accounts independently and use facilities such as ATMs and cheque books.
The central bank 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 on Wednesday. Floating loan products include housing, corporate, vehicle and personal loans.

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