The End of an Era for the Gullak
For generations of Indians, the first lesson in finance came from a clay gullak or a steel piggy bank. It was simple: save more than you spend. But in a world of UPI and digital payments, that lesson is evolving. Parents today are increasingly seeking
ways to give their children a head start in a complex financial world. This shift is driven by a desire for early financial literacy, with research showing that money habits can form as early as age seven. The goal is no longer just to teach savings, but to introduce concepts like budgeting, digital transactions, and long-term wealth creation from a young age.
Fintech Steps in for the Young Saver
A booming fintech sector in India has been quick to cater to this need. A new wave of apps like FamPay, Junio, and Fyp are designed specifically for children and teenagers. These platforms typically offer prepaid cards that parents can top up and monitor, giving kids the freedom to make their own online and offline purchases within set limits. They function as digital pocket money, complete with features that allow children to set savings goals, track their spending, and learn through interactive modules. This provides a controlled environment for children to get accustomed to digital payments, which are now a core part of India's economy.
Introducing the Minor's Demat Account
The change goes beyond just spending and saving. It's now possible for children in India to have their own investment portfolios. Under regulations from the Securities and Exchange Board of India (SEBI), a minor can have a Demat account to hold stocks and mutual funds. While the minor is the owner of the shares, the account must be opened and operated by a parent or legal guardian until the child turns 18. This means parents can start a Systematic Investment Plan (SIP) or buy shares in their child's name, helping them benefit from the power of compounding over a long period. However, there are restrictions: speculative activities like intraday trading are not permitted in these accounts.
Banks Are Adapting Too
Traditional banks are also keeping pace. Major banks like HDFC Bank, ICICI Bank, and SBI offer specialised savings accounts for minors. These accounts often come with features like personalised debit cards with withdrawal limits, cheque books in the child's name, and facilities to set up recurring deposits. Some banks even link these accounts to insurance covers or offer concessions on future education loans. These products serve as a bridge, combining the trust of traditional banking with the modern features that appeal to a tech-savvy generation.
A Crucial Push for Financial Literacy
This entire trend is underpinned by a growing recognition of India's financial literacy gap. According to the National Centre for Financial Education (NCFE), only 27% of Indian adults are considered financially literate, a figure far below that of many advanced economies. For students, the numbers are even lower. By introducing children to financial tools and concepts early, the hope is to raise a generation that is more confident in managing money. These new platforms are not just about providing access to funds; they are educational tools designed to teach practical skills like budgeting, understanding needs versus wants, and appreciating the value of long-term investment. The aim is to make financial education an active, hands-on experience rather than a theoretical lesson learned later in life.
