What changed
RBI observed that some banks were insisting on signatures of both depositors for repayment of joint fixed deposits even when the account had 'Either or Survivor' or 'Former or Survivor' instructions, making the mandate redundant. The circular clarifies that for 'Either or Survivor' accounts, only one signature is needed on maturity; for 'Former or Survivor', the 'Former' alone can operate when both are alive. Premature withdrawals still require both signatures unless a specific joint mandate allows otherwise.
What it means for you
Banks must update their standard operating procedures to ensure that joint fixed deposit repayments on maturity are processed as per the mandate without unnecessary delays. This reduces customer complaints and operational friction. However, premature withdrawals remain subject to stricter controls, requiring both depositors' consent or, in case of death, concurrence of legal heirs.
What you must do
- Review and update branch-level guidelines to ensure 'Either or Survivor' and 'Former or Survivor' mandates are honored on maturity without requiring both signatures.
- Train customer-facing staff on the distinction between maturity and premature withdrawal procedures for joint deposits.
- For premature withdrawals, continue to obtain both depositors' signatures unless a specific joint mandate for premature withdrawal is on record.
- Update system logic to flag joint deposits where premature withdrawal requests need additional verification of legal heirs' consent in case of death of a depositor.
Who it affects
All scheduled commercial banks (excluding RRBs), Retail banking operations handling fixed deposits, Branch managers and customer service teams, Compliance and legal departments
Can a survivor withdraw a fixed deposit on maturity if the other joint holder dies before maturity?
Yes, for 'Either or Survivor' accounts, the survivor can withdraw on maturity without legal heirs' consent. For 'Former or Survivor', if the former dies before maturity, the survivor can withdraw on maturity. Premature withdrawal in such cases requires consent of the survivor and legal heirs of the deceased.
What if customers want premature withdrawals also to follow the 'Either or Survivor' mandate?
Banks can allow this if they obtain a specific joint mandate from both depositors authorizing premature withdrawals under the same operating instructions. Without such a mandate, both signatures are required for premature withdrawal.