RBI's Favour To Children Will Not Boost Business

Banks feel RBI's move won't boost business-Times of India
NEW DELHI: RBI's decision may have warmed a lot of hearts, but most banks aren't really warm to the idea yet. Some banks are indeed planning to piggyback on this decision and explore a newer business angle, but others say enough schemes already exist for children and there is no need to come up with more.

Axis Bank seemed to be upbeat about the announcement as it "could mean providing banking services and products beyond the realm of traditional platforms and formats". Rajiv Anand, president (retail banking) of Axis Bank said, "With the new policy, the core of our programmes would be to make banking comprehendible for children. Programmes which provide financial literacy and make banking non-alienating and fun for children can be expected."

State Bank of India, too, responded positively to the new RBI guidelines on Thursday, saying that a special scheme for children was on its way. A senior SBI official said that though the bank has joint account facility for children and their parents, a special product for children would be launched in the next three months.

But this optimism isn't shared by other banks. In fact, sceptics argued that products for children constitute a miniscule portion of banks' business and therefore, there's no need to take risks to come up with special products for children, at least not now. A few bankers, who did not wish to be named, also questioned the effectiveness of the guidelines in the Indian context. "We don't have the culture, the environment that RBI wants to inculcate in children. Parents nowhere will want to relinquish the control they have over their child's expenses. The current joint account products more than suffice this requirement. Moreover, the situation in developed countries, where children leave home at a very young age and need their own account, isn't the same here as most minors stay with their parents till at least they're 18," said a senior banker.

RBI has also allowed banks to offer additional facilities like internet banking, ATM debit cards and chequebooks to minors. But banking officials see some grey areas-like how to deal with a bounced cheque issued by a minor, or misuse of an ATM card.

Anand said safeguards against misuse of children's accounts could be dealt through online tutorials, real time updates to parents, restricted debit card withdrawal and shopping limits.
Link Times of India