What changed
RBI reiterated that premature withdrawal by a surviving joint holder under 'Either or Survivor' or 'Former or Survivor' mandates requires a specific joint mandate. UCBs must now invariably include this clause in account opening forms and proactively inform both existing and future depositors about this option. The circular supersedes the earlier paragraph 3 of the July 14, 2005 circular.
What it means for you
UCBs must update their account opening forms to include a clause allowing premature withdrawal by the survivor upon death of the other joint depositor, subject to a joint mandate. This reduces legal hassles for survivors and avoids the need to seek concurrence from legal heirs. Banks that fail to do so risk causing inconvenience to depositors and may face regulatory scrutiny.
What you must do
- Incorporate the joint mandate clause in all new account opening forms for term/fixed deposits with joint holders.
- Proactively inform existing term deposit holders about the option to give a joint mandate for premature withdrawal by the survivor.
- Allow joint depositors to provide the mandate at deposit placement or anytime during the deposit tenure.
- Ensure no penal charge is levied on premature withdrawals made under this mandate.
- Review and update internal procedures to align with this circular, superseding the earlier 2005 guidance.
Who it affects
Primary (Urban) Co-operative Banks, Joint term/fixed deposit holders with 'Either or Survivor' or 'Former or Survivor' mandate, Legal heirs of deceased joint depositors
Can a surviving joint holder withdraw a fixed deposit prematurely without a joint mandate?
No, RBI mandates that a specific joint mandate from all joint depositors is required. Without it, the bank cannot allow premature withdrawal by the survivor.
Is there any penalty for premature withdrawal under this provision?
No, the circular explicitly states that such premature withdrawal will not attract any penal charge.
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/tenure of the deposit.