RBI/2011-12/248
DBOD No. Leg BC 46/09.07.005/2011-12
November 4, 2011
All Scheduled Commercial Banks
(excluding RRBs)
Dear Sir,
Repayment of Term/Fixed Deposits in banks
It has come to our notice that some banks insist on the signatures of both the depositors to allow repayment of money in fixed/term deposits, though the deposit account is opened with operating instructions (sometimes called ‘repayment instructions’), ‘Either or Survivor’ or ‘Former or Survivor’. Such insistence on the signatures of both the depositors has the effect of making the mandate given by the depositors redundant. This, in turn, results in unjustified delays and allegations of poor customer service.
2. In this connection, it is clarified that if fixed/term deposit accounts are opened with operating instructions ‘Either or Survivor’, the signatures of both the depositors need not be obtained for payment of the amount of the deposits on maturity. However, the signatures of both the depositors may have to be obtained, in case the deposit is to be paid before maturity. If the operating instruction is ‘Either or Survivor’ and one of the depositors expires before the maturity, no pre-payment of the fixed/term deposit may be allowed without the concurrence of the legal heirs of the deceased joint holder. This, however, would not stand in the way of making payment to the survivor on maturity.
3. In case the mandate is ‘Former or Survivor’, the ‘Former’ alone can operate/withdraw the matured amount of the fixed/term deposit, when both the depositors are alive. However, the signature of both the depositors may have to be obtained, in case the deposit is to be paid before maturity. If the former expires before the maturity of the fixed/term deposit, the ‘Survivor’ can withdraw the deposit on maturity. Premature withdrawal would however require the consent of both the parties, when both of them are alive, and that of the surviving depositor and the legal heirs of the deceased in case of death of one of the depositors.
4. If the joint depositors prefer to allow premature withdrawals of fixed/term deposits also in accordance with the mandate of ‘Either or Survivor’ or ‘Former or Survivor’, as the case may be, it would be open to banks to do so, provided they have taken a specific joint mandate from the depositors for the said purpose.
Yours faithfully,
(Deepak Singhal)
Chief General Manager-In-Charge
The condition that the legal heirs of the deceased should consent to the pre-matued closure will cause lot of hardship. I think this condition has been introduced without application of mind and without taking into consideration of the practical difficulties. Assume a case where the parents are abandoned by their children. The age old couple have some deposits in their joint names either (E or S) or (F or S). If the condition prescribed herein is insisted upon by the bank, then the children who abandoned their parents will only have an upper hand on the surviving parent. Is it the intention of the RBI to kill the survivor mentally by bringing in the legal heirs?
Assume another case where the old couple do not have children. But the banker wants play his own role in strictly following the RBI rule. If the banker does not believe that the old couple do not have children and insists that the consent of the legal heirs is a must, where will the survivor go?