Most of the depositors in the bank follow the Either or Survivor clause as guidelines. There is a lot of confusion regarding understanding that in case of death of a joint-holder of an FD, the surviving joint-holder gets the proceeds of the FD.
new Delhi. Crores of people in India make fixed deposits in banks every year, because it is a safe medium of investment as well as gives guaranteed returns. Banks have also increased the interest rate on FDs after continuous increase in interest rates by the Reserve Bank of India in the last few months, so the trend of people regarding fixed deposits in the bank has increased rapidly. But, there are some rules related to FD which you must know. The terms and conditions are the same in all FD forms with all banks. These include “Anyone or Survivor”, “Jointly”, “Self”, “Minor – Operated by Guardian”, etc.
Most of the depositors in the bank follow the Either or Survivor clause as operating guidelines. There is a lot of confusion regarding understanding that in case of death of a joint-holder of an FD, the surviving joint-holder gets the FD amount.
Troubled by the intricacies of the rules
When the surviving joint holder of an FD approaches the bank for premature withdrawal of the FD after the death of the other joint holder, signatures of all the joint-account holders are required for premature withdrawal. So it can be a big challenge when the joint-holder is incapacitated or dead.
The Reserve Bank of India (RBI) in its circular (notification dated June 9, 2005) enables the claimant/legal heir to recover the FD amount even in the absence of nomination. The RBI, through its awareness campaign on the importance of nomination in case of FDs, mentions that “in case of a joint deposit account, the nominee’s right arises only after the death of all the account holders.” Living
Payment by the bank to the joint-holder or the nominee of the deceased deposit joint-holder represents a valid discharge of the bank’s liability.
Despite the rules, the reality is something else
However, after surveying many real cases, it has been found that the reality is different. As per Money Control news, banks are rejecting the claims of the surviving joint-holders. Keeping this position in mind, the RBI vide notification dated November 4, 2011 stated that premature withdrawal by the surviving joint holder requires the consent of the legal heirs of the deceased joint holder.
However, there is a caveat – banks can still allow premature withdrawal provided they have taken a specific joint order from the depositors for the said purpose during the tenure of the FD, as per the circular dated November 4, 2011. The order states that when an individual invests in an FD, the bank takes a written order (with physical sign) from all the joint holders that the surviving joint holder is permitted to make premature payments to the FD, if any of the joint holders A – The holder dies.
The RBI, in its order dated August 16, 2012, asked banks to incorporate a specific joint mandate from depositors for this purpose. This is also done to publicize widely to provide guidance to the depositors. But sadly this is not happening at the ground level.
We have taken all measures to ensure that the information provided in this article and on our social media platform is credible, verified and sourced from other Big media Houses. For any feedback or complaint, reach out to us at businessleaguein@gmail.com
