Student Savings Accounts
During our school days going to a bank branch was a big deal. We as school going kids had no idea about a bank account. Basically our elders were very conservative when discussing money matters in our presence. It was considered a sort of a blasphemous act to expose children to financial matters. Even there were no such financial schemes where a school-going kid was empowered to have an individual relationship with a bank. The only way out for children to have a bank account was to have it through parents or guardians till attaining the age of majority.
But, the times have changed. Over a period of time, banks started customizing savings schemes for the children and extended account opening as well as operational relaxations to the minors up to a limited extent. Meantime, technology revolution enforced operational changes in every sphere of life. Digital platforms emerged on the scene offering digitized services and products. Amid this scenario, banking operations witnessed dramatic changes where the digital revolution forced the banks to fall in line and restructure their existing schemes and also tailor new products/services to facilitate the ease of electronic transactions
As we are aware, demonetization of high value currency notes in November 2016 pushed the need for digital financial transactions. However, it was the unprecedented ongoing Covid-19 pandemic which forced the individuals, businesses and organizations to board the digital platforms to stay afloat in terms of executing financial matters. The growing digital landscape encouraging faceless transactions has made the banks restructure the parameters of their customer segmentation and it’s here the youngsters falling in the age group of 10 to 18 years now figure prominently as one of the customer segments of the banks.
Talking specifically about the student community falling in the age group of 10-18 years, we have been witnessing them using the social media platforms extensively and during the course, among other things, they come across financial matters. This exposure to information has been raising their inquisitiveness to know about financial matters. Even as many parents encourage their children to use digital platforms for conducting financial transactions under their supervision, ideally an independent bank account with a debit card engraved with their name would give them a feeling of confidence and empowerment.
Actually, banks already have account opening facilities for such age groups (especially students) in place, but on the operational front the bank officials would always discourage them to have independent account facilities. Most of the student account holders are denied the facility of digital services.
What is the procedure for opening an account under this scheme?
The student falling in the group of 10-18 years can approach the bank branch. He/she has to fill in an Account Opening Form which will be provided by the branch. The applicant has to submit two recent passport size photographs, proof of Identity/ Address, Date of Birth certificate, School/College ID and PAN/Form 60, wherever applicable.
Notably, for proof of identity and address the student has to mandatorily submit Aadhaar. In support of the date of birth (DoB), a student can submit a birth certificate issued by Municipal Corporation or Zilla Parishad or Gram Panchayat or Private Nursing Home or Church or the concerned School Authorities. Besides, passport, transfer / leaving certificate issued by School / college / University, passing certificate issued by School / college / Examination Boards / University and mark sheet issued by Educational Institutions /colleges / Examination Boards / University are also acceptable under the scheme.
It’s worth mentioning that the account holder won’t be subjected to minimum balance charges. the operations in the accounts are permitted without the requirement of maintaining minimum balance. No penalty shall be levied even in accounts with ZERO balance.
What is the initial deposit amount required?
The accounts shall be opened with an initial deposit of Rs.100 or above. However, maximum balance in the account shall not exceed Rs. 50,000. In case, the balance in the account exceeds Rs.50,000, the account holder won’t be allowed to withdraw money. The withdrawals in the account shall be permitted through the guardian.
What are the digital banking facilities available to the student account holder?
The account holder will be provided free of cost Debit Card/ATM Card with no six monthly charges. Besides, E-Banking/ Mobile banking / SMS facility will also be provided free of cost, provided the student account holder provides his/her valid mobile number not linked to any other account.
Here, it’s notable that the account holder will be allowed maximum four withdrawals in a month including ATM withdrawals.
Besides, other facilities like RTGS/NEFT, inter –Branch transfers, collection of cheques etc. as per service charges schedule, can be availed by the account holder
Any other terms and conditions?
The account holder cannot open a term deposit or any other savings bank deposit account under the scheme. On attaining the age of 18 years or completion of studies, whichever is earlier, the Student Savings Bank Account–2 shall be converted to General Savings Bank Account. At that time, the account holder has to submit new passport size photographs and specimen signatures to the branch.
Now, a word to parents…
Since the habit of saving forms the backbone of wealth creation, then why not expose our children to financial products where they can save and lay the foundation of wealth creation for themselves. The first step to start saving for your newborn should be to open a savings bank account or a recurring account, to park savings and cash gifts. Relatives and friends invariably bring gifts for the new born, including cash etc. It is best to make use of these gifts. The gift cash should be immediately parked in the account.
When your kid is mature enough, link his pocket money to a savings bank account. Since banking transactions are now purely technology driven, it is good to expose your kid to the latest technology and payment modes, such as mobile banking. And don't forget to monitor the spending habits of your child. A predetermined spending limit would ensure that the child does not go overboard.
Precisely, it is never too early for kids to learn how to handle money. Child's education is incomplete without a few lessons in how to take care of money. In order to teach your child the value of saving, you can't cave in to "I want that!" demands on the spot. Instead, offer a gentle reminder to the kid that the money is growing back home in his money box or in his bank account and soon he can buy things of his choice with his own money.
So teach your children the value of money. It is up to you to see your kids reach adulthood prepared to face life's fiscal challenges. So the theory is – earlier is better. In the short term, they may develop strong saving habits, learn how to make smart purchases, and begin to understand the true meaning of investment. In the long term, they can be helped to avoid accumulating debt. And by teaching the value of saving for the future, you as a parent can help them plan for financial security.