As you all know nowadays whenever we request any sort of statement etc. from non-banking financial companies (NBFCs) i.e. insurance, chit fund,  merchant banking, stockbroking etc. they provide us computer generated with the Legend that ‘This is a computer-generated paper advice/receipt and does not require a signature’.

Similarly, some banks also on deposit of money for fixed terms started issuing computer   generated signed  Fixed Deposit Advice whereas few banks issues Fixed Deposit Advice (in lieu of Fixed Deposit Receipt ). In case unsigned then with the Legend ” This is a computer-generated paper advice/receipt and does not require a signature ” which is not as per law hence illegal act as no such order was issued by Reserve Bank.

Now for the sake of argument if we generate this type of communication with the same line i.e. “This is computer-generated paper and doesn’t require signature” at legend will Bank accept our instruction or make the payment ? The answer is no. They will ask our signature as recorded with them besides for payment they ask us to use prescribed withdrawal form/cheque leaf. Hence why is it one-sided ?

As you all know Fixed Deposit Receipt is always duly signed by the authorized officer and requires to be returned either for maturity payment or with specific instruction if we wish to get renewed at maturity whereas in case of Advice banks honour renewal instruction i.e. without taking back advice.

Further one may take a loan by pledging FD receipt after completing due process but in case of advice bank is not supposed to grant loan.

Please remain informed that no Central/State Government department will accept signed FD advice as security though they do not raise any objection on signed Fixed Deposit Receipt i.e. can easily be offered for security. Hence advice is nothing but an intimation and is not an assignable document.

Further please note that at the time of maturity the prescribed form contains one clause seeking indemnity from  FD customer against the possible fraudulent use of this FD, though customer is not informed appropriately and explicitly of such a condition at the time of accepting such deposit/s and implication of such indemnity he would be signing (forgetting his own money back). Actually this FD receipt is non-transferable paper and unless banks officials collude one cannot create a valid pledge/lien on it.

Please remain informed that advice letter can easily be printed by anyone mischievous whether it is internal or external very easily using mobile or computer because it is on non-secure paper and unsigned hence fraudulent chances are there.

Considering all above Fixed Deposit Receipt is safe as unless we submit it with our signature neither loan is granted nor maturity payment takes place and the possibility of fraud becomes negligible.

Lastly, RBI should note that Banks are issuing FD Advices for their own convenience but it creates a lot of problems/hurdles to customers.

Trust readers, in their own interest, will think over above facts in-depth and share their ideas for further improvement.

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January 2021