The numbers of complaints to Reserve Bank of India, on the different bank’s practices on repayment of of term/fixed deposits in the banks.
No doubt, the front-office staff was relying on the internal circulars.
However, to ensure uniformity on the repayment rules, RBI vide its notification No.RBI/2011-12/248
DBOD No. Leg BC 46/09.07.005/2011-12 dt.04/11/2011, sought to the rules guiding repayment of term/fixed deposits in banks.
The notification can be viewed @ http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=6798&Mode=0
The clarifications in brief are as under: –
Operating instructions – ‘Either or Survivor’.
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.
Operating Instructions – ‘Former or Survivor’.
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.
Special Note for pre-mature withdrawals.
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.
A clear distinction has been made between pre-mature withdrawals and maturity withdrawals. As premature withdrawals are not a normal activity, all depositors’ signatures are insisted upon, to avoid any future complaints.