Reserve Bank Makes Repayment of Fixed Deposits Easy

NEW DELHI : Here comes some respite for customers who want repayment of their joint fixed deposits. Reserve bank of India (RBI) has passed on notification stating that on maturity signatures of both depositors are not needed for repayment of fixed or term deposits if such accounts are opened with instructions “either or survivor”. RBI said that some banks make it mandatory for customers to get the signatures of both applicants on the document to allow repayment of money in fixed/term deposits, though the deposit account is opened with operating instructions called ‘repayment instructions’, ‘either or survivor’ or ‘former or survivor’. The notification by RBI elaborated, “Such insistence on the signatures of both the depositors has the effect of making the mandate given by the depositors redundant. This, in turn, results in unjustified delays and allegations of poor customer service.” It also stated that the signature of both the applicants is compulsive if the payment is made before maturity. The RBI also said, “If the operating instruction is ‘either or survivor’ and one of the depositors expires before the maturity, no pre-payment of the fixed/term deposit may be allowed without the concurrence of the legal heirs of the deceased joint holder. This, however, would not stand in the way of making payment to the survivor on maturity”. RBI also added, “In case the mandate is ‘former or survivor’, the ‘former’ alone can operate/withdraw the matured amount of the fixed/term deposit, when both the depositors are alive. ” However, the signature of both the depositors may have to be obtained, in case the deposit is to be paid before maturity. If the former expires before the maturity of the fixed/term deposit, the ‘survivor’ can withdraw the deposit on maturity.” Central bank notification stated, “Premature withdrawal would, however, require the consent of both the parties, when both of them are alive, and that of the surviving depositor and the legal heirs of the deceased in case of death of one of the depositors.” It further added, “If the joint depositors prefers to allow premature withdrawals of fixed/term deposits also in accordance with the mandate of ‘either or survivor’ or ‘former or survivor’ it would be open to banks to do so, provided they have taken a specific joint mandate from the depositors for doing so.”

http://www.indiamag.in/reserve-bank-makes-repayment-of-fixed-deposits-easy.html