•These accounts act as normal savings accounts and all penalties normally charged on a savings account also applies to them. Penalty for cases such as inability to meet minimum account balance requirements are usually not charged by public sector lenders and cooperative banks. Private sector lenders however do so.

•Parents are not allowed to use these accounts for their personal transaction purposes.

Benefits of these accounts

If such accounts are consciously maintained by parents, then they can be used as a mode of saving funds for future benefits of the child such as to meet educational requirements.

Children can be educated about money and its growth mechanism. The concept of interest rates can be explained to children. They can deposit their pocket money in these accounts and see interest getting earned on it. This also helps in developing the habit of saving money in the child.

Some banks also offer insurance cover as complimentary benefit with these types of accounts.

Word of caution to parents

Parents should however be very alert in monitoring their children and the way they utilize the funds in their account. Children are immature and inadequate guidance from parents may lead to development of the habit of overspending in them.