What changed
RBI reiterated that for term deposits with 'Either or Survivor' or 'Former or Survivor' mandate, premature withdrawal by the surviving depositor after the other's death requires a specific joint mandate. Banks must now incorporate this clause in account opening forms and inform depositors. This clarification supersedes para 3 of the earlier 2005 circular.
What it means for you
Banks must update account opening forms to include a clause for premature withdrawal on death of a joint depositor. They must also proactively inform existing and future depositors about this option. No penal charges apply on such withdrawals if the mandate is obtained, and the mandate can be given at any time during the deposit tenure.
What you must do
- Incorporate the clause in account opening forms for joint term deposits with 'Either or Survivor' or 'Former or Survivor' mandate.
- Inform existing term deposit holders about the option to give a joint mandate for premature withdrawal on death of one depositor.
- Ensure no penal charges are levied on premature withdrawals made by the surviving depositor under this mandate.
- Allow joint depositors to give the mandate at deposit placement or anytime during the tenure.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Joint term deposit holders with 'Either or Survivor' or 'Former or Survivor' mandate, Legal heirs of deceased joint depositors
Can a surviving depositor withdraw a joint term deposit prematurely without a joint mandate?
No, premature withdrawal by the surviving depositor on the death of the other is only permitted if a specific joint mandate has been obtained from both depositors.
When can the joint mandate be given?
The mandate can be given either at the time of placing the fixed deposit or anytime subsequently during the term or tenure of the deposit.
Are there any penalties for premature withdrawal under this mandate?
No, such premature withdrawal by the surviving depositor will not attract any penal charge.