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Joint accounts are accounts that are in the name of two or more persons. The
operation instructions in joint accounts in banks like ‘either or survivor’,
former/latter or survivor’, ‘anyone or survivor’, ‘both or survivor’, or ‘all or
survivor’ are actually a mandate given by the joint holders of the account. Every
above operation instructions have a different meaning and are different from each
other. Have a look at the following types of joint accounts which have dissimilar
operation mandates.
If joint account holders wish to operate the bank account by any one of the joint
account holders or any two or more of the joint account holders jointly, an
instruction is to be given to the bank jointly signed by all the account holders.
Under the operation instruction column of the application, all the joint depositors
must sign to effect such operation instruction. In the absence of such instruction,
the operation would be allowed only against the joint signatures of all the
depositors. Upon the death of any one of the depositors, the operation in the joint
account will be stopped (the account is deemed inoperable) and the balance will
become payable to the survivor/s and the legal representatives of the deceased
person. In the case of joint accounts, the nomination should be made jointly by all
the joint account holders in favour of one person only.
Joint or Survivor : This account is similar to the Joint one; however, the survivor
can continue to operate the account.
It was held that since the fixed deposit receipt was payable to “Either or
Survivor” it showed that the Bank could have got discharged by making payment to
either of the account holders.
Any one of the depositors can operate the account during their lifetime and
survivors will be allowed to operate the account after the death of one of the
depositors without reference to the legal representatives of the deceased. Closure
of the account and or transfer to another branch is possible only at the written
request of all the account holders. When a survivor wants to operate the account or
close the account, he/she/they should submit the death certificate of the deceased
person.
In case of accounts operated by (a) Both or survivor (b) All or survivor operation
would be allowed only against joint signatures of the joint depositors as long as
all the depositors are alive, upon the death of one of the depositors the balance
will become payable to the survivor/s without reference to the legal
representatives of the deceased.
Normally, Banks do not allow the opening of joint accounts of two illiterate
persons or illiterate along with a literate person. However, at the discretion of
the bank, they may allow the opening of accounts of closely related people like
illiterate husband and wife under the condition that the account should be operated
jointly. To know more read: Joint accounts of illiterate and visually impaired
people
In the case of term deposits, banks are advised to incorporate a clause in the
account opening form itself to the effect that in the event of the death of the
depositor, premature termination of term deposits would be allowed. The conditions
subject to which such premature withdrawal would be permitted may also be specified
in the account opening form. Such premature withdrawal would not attract any penal
charge.
GRANTING A LOAN/ ADVANCE AGAINST THE SECURITY OF THE TERM DRPISIT IN JOINT NAMES :
Banks may consider incorporating a clause to the following effect in the account
opening form/application form establishing the contract of term deposit:
‘The Bank may, on receipt of a written application from Shri ——————– the former/the
latter/the first name the second name, etc. of us or Either or Survivor of us, in
its Any one or Survivors of Survivor of us, absolute discretion and subject to such
terms and conditions as the Bank may stipulate, (a) grant a loan/advance against
the security of the term deposit receipt to be issued in our joint names or (b)
make premature payment of the proceeds of the deposit to the former/the latter/the
first named of us/either the second or survivor of us, etc. named of us/any one of
us or survivors or survivor of us”.
NOTE: The above message is posted as an academic interest and for the awareness of
young bankers working in TGB.
Compiled by
- M.Anjaneya Prasad