Urban co-operative banks (UCB) have been directed by the RBI to change their fixed deposits account opening form and include the 'survivor' clause in it. Survivor clause talks about no penalty on premature withdrawal of the deposit in case of the death of any of the joint account holders.
According to the change in the norms, either of the surviving account holder would be able to withdraw money as 'either or survivor' or 'former or survivor' mandate , and would not be charged any penalty.
Earlier the RBI had directed scheduled banks and UCBs to incorporate the 'either or survivor' or 'former or survivor' clause in their fixed deposits opening form.
On non compliance of the norms, the RBI said, "UCBs which have neither incorporated such a clause in the account opening form nor taken adequate measures to make the customers aware of the facility of such mandate, cause unnecessary inconvenience to the 'surviving' deposit account holders(s)."
The regulator further added that UCBs should include the 'survivor' clause in all their fixed deposits accounts; both new and existing. The account holder can give the mandate either at the time of account opening or any time during the tenure.
RBI further added that, "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,"