payment of term deposit with mandate of either or survivor or former or survivor.pptx

8/2/2019 PAYMENT OF TERM DEPOSIT WITH MANDATE OF EITHER OR SURVIVOR OR FORMER OR SURVIVOR.pptx

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PAYMENT TO EITHER OR

SURVIVOR IN DEPOSITS OFBANK-REVISED GUIDELINES OF

RESERVE BANK OF INDIA

BY R.K.GUPTA

B.Com (Hons); CAIIB; AIB (LONDON); LL.B(I)


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PURPOSE OF ARTICLE

My purpose to write this article is to make, the

people at large, aware of the changes made by

Reserve Bank of India which have material

impact on their decision while placing the money

in Term/ Fixed Deposits in the Bank in India. For

any clarification please feel free to contact the

undersigned personally at:House No-207 Sector no 16 FARIDABADor

Mobile No +919899093635


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VARIOUS OPTIONS OF OUR SAVINGS

We all have various options to keep our savings so as to ensure the

following aspects:

a. Better yield /return/ rate of interest on savings.

b. Easy liquidity.

c. Complete safety of interest and principal

d. After the death of the beneficiary, the payment should be madeavailable to the survivor without any problem.

e. The most of the people, though other various options are available,

prefer to keep their savings in Term Deposits/Fixed Deposits in Banks

specifically in the present scenario when the Rates of Interest are

better which are ranging from 8% to 10.5% depending on period ofdeposits.

f. Most of us keep their deposits in joint name i.e. Self and the spouse;

self and son; self and daughter etc with the mandate of Either or

Survivor / Former or Survivor


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THE INTENTION OF A MANDATE BY THE DEPOSITOR

The intention of such a mandate when given by the depositors generally is

found to be as under:

EITHER OR SURVIVOR: The deposit can be withdrawn by any of the

person on maturity and in case one of them expires, the entire money be

paid only to the survivor named in term deposit as absolute beneficiary

irrespective of any other legal heirs just after the death or on maturity i.e.

on presentation to the Bank without any problem.

FORMER OR SURVIVOR: The Deposit can be withdrawn by the person

whose name is written first till he is alive and in case of his death, the

amount may be paid only to survivor named in term deposit as absolute

beneficiary irrespective of any other legal heirs just after the death or on

maturity i.e. on presentation to the Bank without any problem.

In both the above mandates, the intention of the deceased depositors is

to give this money to the survivor mentioned in the term deposits

irrespective of his any number of legal heirs.


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EFFECT OF NOMINATION MADE WHILE

PLACING THE DEPOISTS

a. PLEASE NOTE THAT NOMINEE HAS NO RELATION WITH

THIS MANDATE.

b. NOMINEE WILL RECEIVE THE MONEY BUT HE IS A

TRUSTEE AND WILL HOLD THE MONEY ON BEHALF OFTHE LEGAL HEIRS OF THE DECEASED AND NOT FOR SELF.

c. HE CAN NEVER BECOME THE ABSOLUTE OWNER OF THE

DEPOSITS.

d. THE LEGAL HEIRS OF THE DECEASED CAN CLAIM THISAMOUNT FROM THE NOMINEE AT ANY POINT OF TIME.


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CLARIFICATION OF MANDATE OF E/S BY RBI

So far the depositors were of the opinion that the banks will be

following their instructions in letter and spirit. But Reserve Bank of

India has issued new guidelines vide their circular no DBOD No. Leg BC

46/ 09.07.005/2011-12 dated 04.11.2011 to all the Banks which states

that:

In this connection, it is clarified that if fixed/term deposit accounts areopened with operating instructions Either or Survivor, the signatures

of both the depositors need not be obtained for payment of the

amount of the deposits only on maturity. However, the signatures of

both the depositors have to be obtained, in case the deposit is to be

paid before maturity.If the operating instruction is Either orSurvivor 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.


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CLARIFICATION OF MANDATE OF F/S BY RBI

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 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, theSurvivor can withdraw the deposit only on maturity.

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.


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CLARIFICATION OF MANDATE THROUGH EXAMPLE

a. For example A has placed his money in name of A (self)

& B (Spouse) with the mandate of either or survivor inTerm Deposits/Fixed Deposits for 3 years in the Bank on

01.01.20010.

b. This Couple ofA&B has two sons and one daughter.

c. In case of death ofA on 04.03.2012 during the runningperiod of Term/Fixed Deposit, the money shall not be paid

to B (Spouse) without consent from their two sons and

one daughter being legal heirs.

d. Whereas the intention ofA was that the entire money,

after his death, should be paid to his/her spouse (B) on

maturity or before maturity whenever she prefers according

to his convenience.

e. Same applied for the mandate of former or survivor


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REVISED GUIDELINES OF RBI

If the joint depositors prefer to allowpremature withdrawals of fixed/term

deposits also in accordance with the

mandate of Either or Survivor orFormer or Survivor, as the case may

be, it would be open to banks to do so,

provided they have taken a specific jointmandate from the depositors for the

said purpose.


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UNDERSTANDABLE THROUGH TABLE:

REPAYMENT OF TERM DEPOSITS BY BANKS WITH EITHER OR SURVIVOR

MANDATE ONLY

When Payment on Maturity/

Payment before

maturity

Signatures required of

Both Depositors arealive Payment on Maturity Either Depositor

Both Depositors are

alive

Pre-payment before

maturity

Both Depositor

One Depositor is alive Payment on Maturity Survivor Depositor

One Depositor is alive Pre-payment beforematurity Surviving Depositor +legal heirs of the

deceased Depositor

One Depositor is alive Pre-payment before

maturity

Surviving depositor


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If specific mandate is given by the beneficiaries to the Bankwith EITHER OR SURVIVOR ON OR BEFORE MATURITY then

the following rules will apply as per revised guidelines:

Both Depositors are

alive

Payment on

Maturity

Either of the

depositorBoth Depositors are

alive

Payment before

maturity

Either of the

depositor

One Depositor is

alive

Payment on

Maturity

Surviving depositor

One Depositor is

alive

Payment before

maturity

Surviving depositor


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If specific mandate is given by the beneficiaries to the Bankwith FORMER OR SURVIVOR ON OR BEFORE MATURITY

mandate then the following rules will apply as per revised

guidelines:

Both Depositors

are alive

Payment on

Maturity

First named

depositor

Both Depositors

are alive

Payment before

maturity

First named

depositor

One Depositor isalive Payment onMaturity Survivingdepositor

One Depositor is

alive

Payment before

maturity

Surviving

depositor


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ADVICE TO THE READERS

The necessary instructions have already been issued by most

of the Banks to their field functionaries but there is no

awareness camp or display for the customers in any of the

bank. More so, the Field functionaries of the Bank are also

not aware of the recent guidelines issued. Therefore, if your

intention are in accordance with the example givenhereinabove, give a specific mandate to bank for payment

before maturity and ask your banker to write down on the

Term/Fixed Deposits Receipt that their mandate of Either or

Survivor /Former or Survivor for payment even beforematurity has been noted. This will help you to fulfil your last

wishes without problems to the survivor.


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30-04-2012 14

THANK YOU & WISHINGYOU A PEACEFUL LIFE

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