Meaning of different operation mandates in Joint accounts

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.

Account operated jointly by all the depositors:

Account operated -jointly by all the depositors’ means, an account is maintained in the name of two or more individuals, and the accounts are operated jointly by all the depositors. All transactions in the account must be approved and signed by all the account holders. If any one of the account holders dies, the account will be deemed inoperable, and the bank will pass on the balance in the account to the survivor.

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.

Account operated by “former/latter or survivor/s”:

When a term deposit is opened in the style ‘former or survivor’ or latter or survivor’ the intention of the owner depositor (former/latter) is to facilitate repayment of the term deposit to the survivor only in the event of his death. He (the owner depositor) is in a position to retain with him at all times, the right to dispose of the monies until his death or maturity of the deposit receipt, whichever is earlier.

Former or Survivor: In the case of an account operated by a “former or survivor account”, the former can only operate the account during his/her lifetime and the survivor will be allowed to operate the account after the death of the ‘former’.   For example, if the account is in the name of two individuals say, A & B, the final balance along with interest, if applicable, will be paid to the former i.e. A on the date of maturity and to the survivor B on the death of A.

As per RBI guidelines (AP.Dir Circular  12 dated 15.09.2011), resident individuals in India are permitted to include non-resident close relatives (as defined in section 6 of the Companies Act) as joint holders in their resident bank account on a “Former or Survivor” basis.

Later or Survivor: Similarly, in the case of an account operated by a “latter or survivor account”, the latter can only operate the account during his/her lifetime and the survivor will be allowed to operate the account after the death of the ‘latter’. The second account holder can operate the account. After the death of the latter, the primary account holder takes over the operations.  For example, if the account is in the name of two individuals say, A & B, the final balance along with interest, if applicable, will be paid to the latter i.e. B on the date of maturity and to the survivor A on the death of B.

Account operated by “either or survivor”:

In the case of an account operated by the “Either or Survivor account, either of them can operate the account during their lifetime and by the survivor when one of them dies. If the account is in the name of two individuals says, A & B, the final balance along with interest, if applicable, will be paid to either of the account holders i.e. payable either to A or B, on the date of maturity or to the survivor on death of any one of the account holders. When both the depositors are alive, closure of the account or deposit before maturity,  or transfer to another branch is possible only at the written request of both account holders. In the case where a survivor wants to operate the account in his name or close the account, he/she should submit the death certificate of the other account holder.

Legal Decision on E or S account:

Supreme Court Judgement arising out of S.L.P (C) 15786 of 2002:

Petitioner: Anumati, and Respondent: Punjab National Bank.

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.

Account operated by “anyone or survivors”:

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.

Account operated by (a) “Both or survivor” (b) “All or survivor/s”

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.

Joint accounts of illiterate and visually impaired people:

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

Premature closure of joint accounts by a single holder:

Normally, banks do not allow premature withdrawal of a jointly held fixed deposit by a single holder even if the deposit is held on an ‘Either or survivor’ basis. In such a situation banks normally require the signatures of both/all holders. However, what if the first holder or any one of them needs the funds urgently in a situation when the other holder is not available to sign (hospitalised, etc.)? Some of the private banks like ICICI Bank, HDFC Bank, Axis Bank, Indusind bank, etc. relaxed the rule and allow premature withdrawal of a jointly held fixed deposit by a single account holder. For this, all the joint account holders must give their prior consent for the same. The bank also has a mandate form for this which all the joint account holders need to sign either at the time of opening the account or any time later (before the premature withdrawal).

Premature closure on the death of a depositor:

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.

Premature closure of deposits or granting advance in the case of former or survivor/latter or survivor:

In the case of ‘F or S’ or ‘L or S’,  term deposits, the intention of the owner depositor (former/latter) is to facilitate repayment of the term deposit to the survivor only in the event of his death. He (the owner depositor) is in a position to retain with him at all times, the right to dispose of the monies until his death or maturity of the deposit receipt, whichever is earlier. There should, therefore, be no objection to the bank permitting premature payment of such deposits or granting advances against them at the request of the former/latter without insisting on the production of a consent letter from the other party/parties to the term deposit receipt. Here also it is preferable to make this position explicit to the joint depositors, by incorporating a suitable clause in the term deposit account opening or application form.  (RBI circular LAC/19-96-29   28 August 1980 (Ref. paragraph 5.1.1). The banks usually make this position explicit to the joint depositors, by incorporating a suitable clause in the term deposit account opening or application form. When a survivor wants to operate the account or close the account he/she should submit the death certificate of the former.

Granting a loan/advance against the security of the term deposit 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”.

Originally posted on July 19, 2014, edited and reposted on March 26, 2023

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