What changed
Previously, payment orders for matured Relief/Savings Bonds were issued in the names of all joint holders. Now, if all other joint holders execute a prescribed Joint Holders Power of Attorney in favour of one holder, the maturity proceeds can be released solely to that holder. This aligns with the existing practice for interest warrants, which were already allowed to be issued to the first holder with a similar POA.
What it means for you
Banks can now simplify the payout process for matured bonds held jointly, reducing operational friction and improving customer satisfaction. This change leverages Section 45 of the Indian Contract Act, 1872, which permits devolution of joint rights when a contrary intention is declared via a POA. Lenders must ensure branches are trained to accept and verify the prescribed POA format before issuing single-name payment orders.
What you must do
- Update internal procedures to allow single payment orders for matured Relief/Savings Bonds when a Joint Holders Power of Attorney is provided.
- Train designated branch staff on the prescribed POA format and verification process.
- Communicate this facility to customers through branch notices and digital channels to enhance service experience.
- Ensure compliance with the earlier circular (No.CO.DT.13.01.201/1488/2000-01 dated September 20, 2000) for interest warrants as well.
Who it affects
State Bank of India and associate banks, 17 nationalised banks, ICICI, IDBI, HDFC, UTI Bank Ltd, Stock Holding Corporation of India Ltd, All designated branches operating the Relief/Savings Bonds scheme
Can we issue a payment order to a joint holder without a Power of Attorney?
No. The payment order can only be issued in the name of one joint holder if all other joint holders have executed a Joint Holders Power of Attorney in their favour, as per the prescribed format.
Does this apply to interest warrants as well?
Yes. Interest warrants were already allowed to be issued in the name of the first holder subject to a Joint Holders Power of Attorney, as per the circular dated September 20, 2000.
Which banks are covered by this circular?
This applies to State Bank of India and its associate banks, 17 nationalised banks, ICICI, IDBI, HDFC, UTI Bank Ltd, and Stock Holding Corporation of India Ltd.