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Whenever, more than one person open a bank account, they have to advise the bank in writing the ‘manner’ in which account holders will be allowed to operate the account, withdraw the money. This is called ‘ mode of operations’ and the instructions are called ‘mandate’. Account holders are free to decide their mode of operations. Some popular modes of operations are as under:

E OR S: EITHER OR SURVIVOR

When two persons open an account, mode of operation could be E or S – either or survivor, meaning that any one of the account holder can operate the account. This mode of operation is most common among close relatives/married couples. In case of death of anyone of the two, the survivor becomes the owner of the account and can operate the account singly.

JOINT OPERATION

If both of them decide to operate the account jointly. Usually, business firms, offices etc. use this type. The bank will not allow operation in the account to any of the two ‘Singly’.


F OR S: FORMER OR SURVIVOR

When two persons open an account jointly, but rights of operation are restricted to the first person only. The second person gets the operations rights only after the death of the first person. Usually, this mode of operation is used by elderly persons while opening joint account with their siblings.

A OR S: ANYONE OR SURVIVOR

This mode is used when there are more than two account holders. This means that anyone of the account holders can operate the account singly.

STANDING INSTRUCTIONS

It is a facility offered by banks where they undertake to carry out the various transactions on behalf of their customers on recurring regular basis. For example, transferring school fee amount from customer’s account to school’s account on due dates, payment of loan installment on due dates, payment of insurance premium etc.

DORMANT / INOPERATIVE ACCOUNTS


In the running accounts such as current account and savings account, account the holder is expected to regularly operate the account. In case he fails to do so, say for a period of more than one year or so, the account may be termed as dormant or inoperative account. Exact period may vary from bank to bank. RBI has directed banks nor to recover any penalty for non maintenance of minimum balance in inoperative accounts.

UNCLAIMED ACCOUNTS

This is a legally defined concept. If there is no transactions in an account for 10 years or more, the account is classified as an ‘unclaimed account’ as per the provisions of Banking Regulation Act, 1949. Every bank is supposed to send a list of such accounts to RBI as on December 31stevery year. Balance held in these accounts is transferred to Depositor Education and Awareness Fund of RBI.
If some account holder comes back to operate the account, the funds are released to him after proper verification.

DEPOSITOR EDUCATION AND AWARENESS FUND

To utilize the funds lying in the deposit accounts with banks, which have not been operated upon for a period of more than 10 years (unclaimed accounts as defined in Banking Regulation Act), govt. has decided to create a ‘Depositor Education and Awareness Fund’ with RBI and has amended the Banking Law accordingly. The amount will be credited to this fund within 3 months from the expiry of the said period of 10 years.

NOMINATION

OBJECTIVE: The facility was started to facilitate easy transfer of funds in the account of deceased account holders to their legal heirs.

As per section 45-Z of the Banking Regulation Act, all bank deposits can have the facility of nomination as per which the deposit account holders can nominate any person of any age (even a minor) as their nominee to receive the amount outstanding in the account, after their death. The nominee comes into picture only after the death of the depositor and he is only authorized to receive the amount but he is not the right full owner of the amount. The amount belongs to the legal heirs and the nominee is trustee of legal heirs.

Facility of nomination is available in only 3 types of accounts: – i) All deposit accounts (ii) safe custody accounts and (iii) safe deposit locker accounts. The facility is no available in any of loan accounts.
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