What changed
RBI observed that some banks were requiring both depositors' signatures for maturity repayment of joint fixed/term deposits even when the account had 'Either or Survivor' or 'Former or Survivor' instructions. This circular reiterates that such practice makes the depositor mandate redundant and causes customer service issues. It clarifies the correct procedure for maturity and premature withdrawals under these mandates.
What it means for you
Banks must honor the operating instructions given by joint depositors for fixed/term deposits. For 'Either or Survivor' accounts, only one signature is needed at maturity; for 'Former or Survivor', only the former's signature is needed. Premature withdrawals still require both signatures unless a specific joint mandate is obtained. This reduces unnecessary delays and improves customer service for UCBs.
What you must do
- Update your fixed/term deposit payout procedures to ensure that for 'Either or Survivor' accounts, only one depositor's signature is required for maturity payment.
- For 'Former or Survivor' accounts, allow the former to withdraw the matured amount alone when both are alive.
- Continue to require both depositors' signatures for premature withdrawals unless you have obtained a specific joint mandate allowing premature withdrawal under the same operating instructions.
- Train branch staff on these rules to avoid unjustified delays and customer complaints.
- Review existing joint deposit accounts to ensure operating instructions are correctly recorded and followed.
Who it affects
Primary (Urban) Co-operative Banks, Joint fixed/term deposit account holders, Branch operations staff handling deposit payouts
Can a survivor withdraw a fixed deposit on maturity if the other joint holder dies before maturity under 'Either or Survivor'?
Yes, the survivor can withdraw the deposit on maturity without needing concurrence from legal heirs. However, premature withdrawal after death of one holder requires consent of the survivor and legal heirs of the deceased.
What if joint depositors want premature withdrawals also under 'Either or Survivor' mandate?
Banks can allow this if they have obtained a specific joint mandate from the depositors authorizing premature withdrawals under the same operating instructions. Without such a mandate, both signatures are needed for premature withdrawal.
Does this circular apply to all types of deposits?
It specifically addresses fixed/term deposits in Primary (Urban) Co-operative Banks. The principles may be relevant for other deposit types with similar operating instructions, but the circular is limited to term/fixed deposits.