What changed
RBI observed that some RRBs and co-operative banks were demanding signatures of both depositors for repaying matured fixed deposits with 'Either or Survivor' or 'Former or Survivor' mandates, making the mandate redundant. The circular reiterates that for maturity payment, only the survivor (or former, as applicable) needs to sign; both signatures are not required. It also mandates banks to incorporate a clause in account opening forms allowing premature withdrawals under the same mandate if depositors give a specific joint mandate.
What it means for you
Banks must stop the practice of requiring both depositors' signatures for matured deposits with survivor mandates, reducing customer complaints and delays. For premature withdrawals, banks can now allow the survivor to operate without legal heir consent if a joint mandate is obtained at account opening or later. This simplifies operations but requires banks to update forms and educate customers about the option.
What you must do
- Update account opening forms to include a clause for joint mandate allowing premature withdrawals under 'Either or Survivor' or 'Former or Survivor' mandates.
- Train branch staff to accept only the required signature (survivor or former) for matured deposits with such mandates.
- Communicate the new option to existing and future term deposit holders through notices, SMS, or branch interactions.
- Ensure that for premature withdrawals without a joint mandate, both depositors (or legal heirs if one deceased) sign as per existing rules.
Who it affects
Regional Rural Banks (RRBs), State Co-operative Banks (StCBs), District Central Co-operative Banks (DCCBs), Joint fixed/term deposit account holders with survivor mandates
Can we still ask for both signatures on a matured fixed deposit with 'Either or Survivor' mandate?
No. RBI clearly states that for maturity payment, only the survivor (or former, as per mandate) needs to sign. Insisting on both signatures makes the mandate redundant and leads to poor customer service.
What about premature withdrawal of such deposits?
For premature withdrawal, both depositors must sign if they are alive. If one dies, the survivor can withdraw only with consent of legal heirs, unless a specific joint mandate allowing premature withdrawal under the survivor mandate has been obtained from both depositors.
How can we allow premature withdrawal without legal heir consent?
You must incorporate a clause in the account opening form (or obtain later) where both depositors give a joint mandate to allow premature withdrawal under 'Either or Survivor' or 'Former or Survivor'. Once obtained, the survivor can withdraw prematurely without legal heir concurrence.