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.
