Wednesday, May 7, 2014

10-Year-Olds Can Open And Operate Bank Account Alone: RBI

"

To boost financial inclusion, the Reserve Bank of India (RBI) on Tuesday said that banks were at liberty to allow minors above 10 years to independently open and operate savings bank accounts…

RBI also allowed banks to offer additional facilities like internet banking, ATM, debit card and chequebook to a minor.

…However, RBI has given the leeway to banks to fix the minimum age at which they will allow minors to operate savings bank accounts independently. Banks can also fix a maximum limit on money such minors can have at their disposal through such account. Banks can also decide on what kind of documents will be needed to open accounts by minors, a notification from RBI said.

Link

Interesting. I honestly don't see any major positive impact from such 'financial inclusion'.

On one side we have individuals like KN Govindacharya and his advocates (along with an idiotic Division Bench of Justices) claiming that anyone under 18 is a minor and legally incompetent to enter into ANY agreement and THEREFORE should not be allowed to have a social networking account (*rolls eyes). [Link].

On the other hand, we have RBI issuing directives that will allow 10 year olds to independently operate bank accounts. Not that I have a problem with this. Just that… one would have to be a complete retard to ignore the obvious issue. Which is - How easily this could be used to launder black money within the country.

10 year olds depositing INR 100 - 1000 in their independent bank accounts will obviously not be asked to disclose the Source of Funds now would they? So, the cash goes into the account and stays there for a while, before being transferred out using an ATM card or a cheque or an online transfer. Even transactions for small amounts would eventually add up to a lot. All you would need is about 100,000 accounts for minors spread all across the country. Not too difficult, considering how people have been managing to set up accounts for paper companies and fake identities as it is. Setting up real accounts for fake minors would (in all likelihood) be even easier.

Given that money laundering is a serious problem, it just seems stupid that the RBI would want to start something that could potentially serve as a much easier option to facilitate laundering of dirty money.

Even if this doesn't get exploited by the organised crime networks (I am sure they would have more efficient set ups already in place), it will definitely be exploited by the parents/guardians of minors.

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