RBI Directs Banks to Incorporate ‘Survivor’ Clause

The Reserve Bank of India (RBI) instructed banks to incorporate the “either or survivor” or “former or survivor” clause in account opening forms.

The new directive says that, banks should incorporate this clause in all the account opening forms itself, so that, in the event of death of the depositor, the premature withdrawal of term deposits would be allowed by the surviving depositor without seeking the concurrence of the legal heirs of the deceased joint deposit holder.

RBI in its clarification said that, the premature withdrawal by the surviving depositor would not attract penal charges.

The “either or survivor” clause in a joint term deposit account allows premature withdrawal on the death of the one of the joint account holders. In case of joint term deposits with style of “former or survivor”/ “latter or survivor” clause, the owner of the depositor has the right to withdraw money until his death or maturity of the deposit whichever is earlier. Survivor(s) resembles nominee(s).

The central bank observed that many banks are not incorporating the “either or survivor” or “former or survivor” clause in the account opening forms. Also, banks have not taken adequate measures to make customers aware of such mandatory facility.