Module: | KYC, NPAs, Advances & Investment Valuations
Q207: Scenario: A 12-year-old minor opens an independent savings account. A pensioner visits a non-home branch of his bank to submit his annual life certificate. A customer purchases a demand draft for a business transaction. Based on RBI guidelines, consider the following statements:
1. Minors above the age of 10 years are legally permitted to open and operate savings or term deposit accounts independently without a guardian.
2. Accounts of minors, whether operated independently or by a guardian, must never be allowed to be overdrawn and must always remain in a credit balance.
3. The non-home branch receiving the pensioner's life certificate must physically mail the document to the home branch for CBS updation within 3 working days.
4. The demand draft purchased by the customer shall be uniformly valid for a strict period of exactly three months across all commercial banks.
Which of the statements given above is/are correct?
2. Accounts of minors, whether operated independently or by a guardian, must never be allowed to be overdrawn and must always remain in a credit balance.
3. The non-home branch receiving the pensioner's life certificate must physically mail the document to the home branch for CBS updation within 3 working days.
4. The demand draft purchased by the customer shall be uniformly valid for a strict period of exactly three months across all commercial banks.
Which of the statements given above is/are correct?
✅ Correct Answer: A
The correct answer is A. Statement 1 is correct: The regulations explicitly allow minors above 10 years to open and operate deposit accounts independently to promote financial inclusion at an early age.
Statement 2 is correct: The guidelines establish an absolute risk barrier, mandating that minor accounts can never utilize overdraft facilities and must strictly maintain a credit balance.
Statement 3 is incorrect: The rules expressly forbid the physical routing of life certificates to home branches.
The receiving non-home branch is mandated to promptly update and upload the certificate directly into the Core Banking System (CBS) itself to prevent any delays in pension processing.
Statement 4 is correct: The framework harmonizes the validity of payment instruments, establishing that a demand draft is uniformly valid for a period of exactly three months across the entire banking system.
Statement 2 is correct: The guidelines establish an absolute risk barrier, mandating that minor accounts can never utilize overdraft facilities and must strictly maintain a credit balance.
Statement 3 is incorrect: The rules expressly forbid the physical routing of life certificates to home branches.
The receiving non-home branch is mandated to promptly update and upload the certificate directly into the Core Banking System (CBS) itself to prevent any delays in pension processing.
Statement 4 is correct: The framework harmonizes the validity of payment instruments, establishing that a demand draft is uniformly valid for a period of exactly three months across the entire banking system.