Attention - Joint FD holders : Pl Read to Understand Implications in case of a Demise

Most of us have joint FDRs with "either or survivor" operational instruction. We feel that by having joint operational instruction, we will never face any operational difficulty in case of any contingency. Our general presumption is that the other surviving joint holder of FD will have the same operational powers as we enjoy when both of us are alive. 

But this assumption of ours is far away from reality. In absence of correct knowledge of exact RBI guidelines, we simply believe that in case of death of any one of the joint FD holders, the surviving one can get it even pre- matured as per his/ her own convenience. Till yesterday morning, I was also under the same impression. 

Yesterday, by chance family members of one of our society flat met me at Union bank and shared their problem of not getting the FDRs of their parents pre- matured. I decided to help them in sorting out the matter and met the Bank manager along with them to peruse him to allow the pre- maturity of FDS. But when the manager disclosed me the RBI provisions regarding the pre- maturity of FDRs, I was bit surprised and even quite shocked also. 

As per RBI guidelines, in case of death of any one of the joint holders of FDR (even having valid nomination also), the surviving joint holder does not have free assess to the funds so as to get it pre- matured as per his/ her own will or choice. He/ she can get the final amount only at the time of final maturity of the FDR without any one interference. Before maturity time, for getting it pre- matured, consent of all the legal heirs of deceased FDR holders is a must. This means the joint holder do not enjoy the free authority to get the FDRs pre- matured. The surviving FD holder is entitled only at the time of regular maturity of the FDR and not before that. 

So, if we have long duration joint FDR, then in case of demise of one of the joint holders, the surviving one can not get the FDRs pre-matured without the consent of all the legal heirs of the deceased one. This provision restricts the final authority of any surviving joint holder to use the funds freely in case of need. If any legal heir has any objection or is not instantly available, the surviving FD holder will be bound to wait till the final maturity date or availability of all the legal heirs at a given time. 

Further never leave your joint holding FDR without nomination as he will be the one to claim the FDR proceeds in case of any contingency with both the FD joint holders, otherwise all the legal heirs will be required to claim the amount. One thing is very clear that here nominee is only the custodian of the Proceeds - not the owner of the amount so handed over to him/ her. If we wish to make the nominee as the sole claimant of FDR proceeds after our death, we should clearly mention this fact in our will also to avoid any future dispute. 7Hope knowledge of this important provision of RBI will help us in planning the management of our own funds for timely availability thereof at the time of real need.

Note:- This opinion of mine is based on real experience and documentary evidence available in this regard.

Thanks to my Senior banker friend for sharing this useful alert.

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