Mumbai: The RBI today asked banks to modify Fixed Deposit (FD) account opening forms to allow pre-mature withdrawal of FD on death of one of the joint account holders without any penalty.
Under the modified norms, it would be easier for the surviving joint account holders of FD with ‘either or survivor’ or ‘former or survivor’ mandate to go in for pre-mature withdrawal of fixed deposit in the event of death of the other.
As per the notification of the Reserve Bank of India (RBI), banks will have to incorporate a clause in the FD form to give option of premature withdrawal by survivor in case of death of the other joint account holder.
The RBI has issued the notification following complaints that several banks have not fully complied with its earlier circular of allowing premature withdrawal of FD by surviving joint account holder.
“The joint deposit holders may be permitted to give the mandate either at the time of placing fixed deposit or anytime subsequently during the term/tenure of the deposit.
“If such a mandate is obtained, banks can allow pre-mature withdrawal of term/fixed deposits by the surviving depositor without seeking the concurrence of the legal heirs of the deceased joint deposit holder,” RBI said.
It further clarified that “such premature withdrawal would not attract any penal charge”.