Explore the crucial need for transposition in the banking sector, especially benefiting senior citizens and rural residents. Delve into the advantages of joint accounts and the proposal for a small administrative reform to ease the process. Join the conversation on enhancing banking practices for a more efficient and customer-friendly experience.

Govt. of India has initiated several reforms across sectors in the last decade. During this period several reforms were introduced in the banking sector too. However, there is scope to implement a few more for the benefit of senior citizens and rural residents in particular.

I draw readers’ attention to one matter. This is a small administrative-type reform which will provide relief to many if implemented properly.

As we all know 38 years ago there was no nomination facility in banks for deposits, lockers etc. Therefore, there was a practice of keeping all the accounts (whether savings, current, recurring or fixed) in joint name/s. Joint accounts were opened with a trusted family member or a business partner etc.

We continued the practice of opening accounts jointly as we experienced so many benefits, such as:

1) In a joint account, the account becomes operational as per written instructions submitted. There is a provision to change earlier instruction/s by submitting another one, duly signed by all.

2) Generally, in a joint account, the joint names are of all the trusted people, hence the operation of the account becomes convenient.

3) Generally, such accounts are styled as either or survivor. Such a mandate makes it convenient for anyone to operate. Anyone can easily transact i.e. without any hurdle.

4) Nowadays, in many banks, only the account holder can operate the account in another branch other than his own. The facility of bank mandate is limited to home /base branches. In this situation, a joint account becomes convenient.

5) The most important fact in operative (CASA) joint accounts is that even if the holder dies the account continues in a single name. The survivor submits a written request along with the death certificate to delete the deceased’s name and the account continues.

6) Despite an account in joint names, the accounts prefer to register nomination due to very logical arguments.

Nowadays due to various reasons, joint account holders feel the necessity to do name transposition and request banks for such transposition.

In the absence of prevalent practice, bank authorities show their inability to honour such requests. Also, banking software is not so designed.

Due to Banking rules bank branch always communicates with the first holder of joint accounts and it submits information to IT authorities etc linked to the first named depositor (mentioning 1st holder’s PAN etc).

For everyone’s information CDSL/NSDL both offers transposition-cum-demat facility besides transposition is also permitted in jointly held physical shares, etc.

I suggest banks include one more undertaking/clause in the account opening form, with suitable wording, permitting it the request for transposition of names so that based on this original mandate it can entertain such requests coming from joint account holders, in future.

Bank for its financial safety at the time of honouring such request can seek indemnity from joint applicants requesting the transposition to keep itself harmless against all losses, costs, claims, actions, demands, risks, charges, expenses, damages, etc. for all time hereafter, whatsoever bank may suffer because of this transposition, at the joint account holders request.

Trust all interested in this will raise this matter at different forums so that appropriate directions can come from the Banking Regulator regarding the process of account holder name transposition become a reality.

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February 2024