Mumbai, August 16: The Reserve Bank of India has clarified that in the case of term deposits with “either or survivor” or “former or survivor” mandate, banks are permitted to allow premature withdrawal of the deposits by the surviving joint depositor on the death of the other, only if, there is a joint mandate from the joint depositors to this effect. It had further stated that the joint deposit holders might be permitted to give the mandate either at the time of placing fixed deposit or anytime subsequently during the term/tenure of the deposit.
Earlier Instruction:
The earlier instruction issued by RBI in regard to the Pre-Mature payment of Time Deposits said:
“The signatures of both the depositors may have to be obtained, in case the deposit is to be paid before maturity. 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 instruction dated November 4, 2011)
Revised Instruction:
RBI vide their circular issued on August 16, 2012 instructed the banks that:
“The joint deposit holders may be permitted to give the mandate either at the time of placing fixed deposit or anytime subsequently during the term/tenure of the deposit. If such a mandate is obtained, banks can allow premature withdrawal of term/fixed deposits by the surviving depositor without seeking the concurrence of the legal heirs of the deceased joint deposit holder. It is also reiterated that such premature withdrawal would not attract any penal charge.”
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