Banks flout RBI rules on retaining account numbers after the demise of a joint account-holder
Moneylife Digital Team 19 May 2011

In 2008, the apex bank had clearly specified the rules and regulations on the addition or deletion of a joint account-holder’s name under specific circumstances. However, this rule is not being followed 

Reserve Bank of India regulations clearly specify that a bank has to maintain an account in the name of a joint account-holder, on the demise of a primary or joint account-holder. But a few instances have come to light where banks are openly flouting these rules-and putting a number of bereaved families under pressure.   

Take the case of Pune-based resident Anil Agashe, who held a joint savings account along with his father in HDFC Bank's Satara (in Maharashtra) branch. After his father's demise, he approached the bank to delete his father's name and continue with the account in his name. However, the bank informed Mr Agashe that "as per the rules of the bank" the account would be closed on the death of the first account holder and a new account will have to be opened in Mr Agashe's name.

But while this move might seem logical, it actually creates a number of problems for the surviving account-holder. For example, the existing account number might be having an ECS facility for direct credit of mutual fund dividend amounts or a direct debit facility for paying of utility bills.

The surviving joint account-holder will then have to spend time and money informing all the entities linked to the previous account number, the 'new' account number.  

In this case, being an ex-bank employee himself, Mr Agashe demanded in writing about the bank's rules, since the joint account was operating with "either or survivor" status. In fact, the RBI allows simple deletion of a deceased person's name from a particular account.

After many meetings with the bank manger, Mr Agashe was told that there was a "way out" to continue with the account. Later, his account was changed from a senior citizen zero-balance account to a regular savings account.

In the e-mail Mr Agashe had sent to the bank's managing director Aditya Puri, for the trouble he had gone through, HDFC Bank replied to the message, admitting its mistake and blamed the core banking system for the problem.

"As you have correctly stated, regulatory guidelines, vide Master Circular dated 3rd November 2008, allow for such deletion/addition of joint holders in an account if the circumstances warrant. In deference to these guidelines, the Bank has raised a request for suitable changes in its Core Banking system to accommodate this functionality. However, as the Core Banking platform of the Bank itself is undergoing a change to a new system, all systemic developments have been kept in abeyance till the system changeover. Hence, in the interim, we are continuing with our extant practices in this matter," the bank said in the e-mailed reply.

Such a reply comes as a surprise, since these RBI guidelines were issued way back in 2008-and why have they not been implemented? Is blaming the core banking system any excuse?

Mr Agashe told Moneylife, "When I used to work with a bank way back in 1977, we used to simply delete the deceased person's name after verifying the death certificate. There were no such guidelines then, RBI in 2008 just reissued these guidelines. The bank manger himself had no idea about the master circulars.

"My objection is that a bank can't have a procedure which is at variance with RBI guidelines. This will carry an operational risk on part of the bank," he explained.

Sources have confirmed to Moneylife that the RBI would be taking up this issue with the bank. It is also known that these issues regarding consumer banking will be addressed in the report on customer services, which the panel headed by M Damodaran has to table.

Having been a banker himself, Mr Agashe got his issue resolved. But what about other customers who don't know their rights? "Many people are unaware of the rules and regulations of the RBI, which gives an easy route for banks to get away with their poor services," says Mr Agashe.

5 months ago
My Late father was Banker, he had a fixed deposit and JT applicant as my sister but later he changed the JT applicant in daughter in law's name thereafter once again he changed JT applicant in Son name (that I am) and all these changes were updated in my FD receipt with banks stamp and branch Manager signature. After few months Dad passed away and I have submitted DC and foreclosed FD and same were transferred to registered joint account and I re invested in same bank with new FD receipt but when I went to close that FD Bank says that we cannot as my sister have claimed it with the influence of EX-SDM and till date Bank is not allowing me to close my Fixed deposit. Can anyone please help me on this exceptional case.
Thanking in anticipation.
Sindhi Immigrants
4 years ago
Sadhana Kale
5 years ago
Bank must follow RBI rulesNomination Acts etc ,but they generally do not . I am a banker , a co op bank has frezed my a/c when asked to change mode of operation, it also misplaced a/c op forms (fd) and on paying in slip mentioned 2 nominees against rbi rules.The slip is not checked,signed and was traced after the death of depositor, wherein the computer shows only one nominee after the death of depositor. I am fighting for last 41/2 yrs.bad experience of co op bank.
Veena Gopal
5 years ago
What is to be done in case of joint holders in demat father had given name of my mother in demat account and now when he wanted to add nominees to the account they told that without the joint account holder, they will not be able to add nominees. So my father asked them to close the account so that he opens a new demat account, transfers all the shares and then close the old account. They refuse to close the old account too. What is to be done in this case?
8 years ago
Colonel Arun Gupta
9 years ago
Banks offer different types of joint account relationships. Here are a few.

This is the most common type of joint account and is applicable between any two individuals. For example, if a husband and wife have a joint account with 'either or survivor' clause, either of them can operate the account and in the case of the death of one of the depositors, the other can continue or the final balance in the account along with all interests (as applicable at the time of closure) will be paid to the survivor.
If there is a nominee for the account, the conditions will be the same and the nominee gets access to the funds on the death of both the account holders.

This type of account is normally held when more than two individuals start an account jointly. Here, any of the depositors can operate the account at a time and in case if any of the depositors expire, the others can continue the account and if required, the final balance along with interest will be paid to any of the survivor/s as requested.

In this type of joint account, only the first account holder can operate the account. The second depositor gets the right only on the death of the first after undergoing some basic formalities like submission of proof of death etc.

This is similar to the former or survivor, but the difference is that, in this type of account, only the second account holder (latter) can operate the account. The survivor or the former account holder gets access to the fund only on death of the latter and on producing the proof for the same.

A savings bank account can also be opened in the name of a minor jointly with a guardian. Here, only the guardian is supposed to operate the account on behalf of the minor. The guardian should be parents or in special cases, a legal guardian, as appointed by court. Some banks allow minors above the age of 12 to open and operate accounts independently.

• Any mandate / power of attorney for operating a joint account or authorizing another person on behalf of the depositors, is to be given by all account holders or with the consent of all account holders.
• All operational instructions and information in connection with the relationships formed is to be given by all the joint account holders irrespective of the mode of operation.
• If there is a nominee to a joint account, the nominee gets access to the account only when all the account holders cease to exist. In case if both the account holder and nominee is no more, the legal heirs of depositor/s will get the funds.
• In case of a joint account, all the depositors are singly and jointly liable for overdraft if any, even if the application / demand promissory note is signed by one of them.

nagesh kini
Replied to Colonel Arun Gupta comment 9 years ago
Thanks Col. sab,
Please keep updating lay readers with such useful infos. Keep it up, may your tribe increase!
Colonel Arun Gupta
9 years ago

Here are some extracts and definitions for general consumption

RBI Circular Extracts

5.8.8 Addition or deletion of the name/s of joint account holders.
A bank may, at the request of all the joint account holders, allow the addition or deletion
of name/s of joint account holder/s if the circumstances so warrant or allow an individual
depositor to add the name of another person as a joint account holder. However, in no
case should the amount or duration of the original deposit undergo a change in any
manner in case the deposit is a term deposit.

19.6.1 Nomination facility in respect of deposits
(i) Nomination facility is intended for individuals including a sole proprietary
(ii) Rules stipulate that nomination shall be made only in favour of individuals. As
such, a nominee cannot be an Association, Trust, Society or any other Organisation or
any office-bearer thereof in his official capacity. In view thereof any nomination other
than in favour of an individual will not be valid.
(iii) There cannot be more than one nominee in respect of a joint deposit account.
(iv) Banks may allow variation/cancellation of a subsisting nomination by all the
surviving depositor(s) acting together. This is also applicable to deposits having
operating instructions " either or survivor".
(v) In the case of a joint deposit account the nominee's right arises only after the
death of all the depositors.

19.7 Customer Guidance and Publicity Educating Customers
on the Benefits of nomination / survivorship clause
(i) The nomination facility is intended to facilitate expeditious settlement of claims in the accounts of deceased depositors and to minimise hardship caused to the family
members on the death of the depositors. The banks should endeavour to drive home to
their constituents the benefit of nomination facilities and ensure that the message
reaches all the constituents by taking all necessary measures for popularising the
nomination facility among their constituents.
(ii) Banks should give wide publicity and provide guidance to deposit account holders on
the benefits of the nomination facility and the survivorship clause. Illustratively, it should
be highlighted in the publicity material that in the event of the death of one of the joint
account holders, the right to the deposit proceeds does not automatically devolve on the
surviving joint deposit account holder, unless there is a survivorship clause.

20.1 Accounts with survivor/nominee clause
20.1.1. In the case of deposit accounts where the depositor had utilized the nomination facility and made a valid nomination or where the account was opened with the survivorship clause ("either or survivor", or "anyone or survivor", or "former or survivor" or "latter or survivor"), the payment of the balance in the deposit account to the survivor(s)/nominee of a deceased deposit account holder represents a valid discharge
of the bank's liability provided :
(a) the bank has exercised due care and caution in establishing the identity of the survivor(s) / nominee and the fact of death of the account holder, through appropriate documentary evidence;
(b) there is no order from the competent court restraining the bank from making the payment from the account of the deceased; and
(c) it has been made clear to the survivor(s) / nominee that he would be receiving the payment from the bank as a trustee of the legal heirs of the deceased depositor, i.e.,
such payment to him shall not affect the right or claim which any person may have against the survivor(s) / nominee to whom the payment is made.

20.1.2. It may be noted that since payment made to the survivor(s) / nominee, subject to
the foregoing conditions, would constitute a full discharge of the bank's liability, insistence on production of legal representation is superfluous and unwarranted and only serves to cause entirely avoidable inconvenience to the survivor(s) / nominee and would, therefore, invite serious supervisory disapproval. In such case, therefore, while making payment to the survivor(s) / nominee of the deceased depositor, the banks
should desist from insisting on production of succession certificate, letter of
administration or probate, etc., or obtain any bond of indemnity or surety from the survivor(s) /nominee, irrespective of the amount standing to the credit of the deceased account holder.

Some Definitions

A deposit account is a savings account, current account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the bank and represents the amount owed by the bank to the customer. Some banks may charge a fee for this service, while others may pay the customer interest on the funds deposited.

Joint account is a bank account shared by two or more individuals. Any individual who is a member of the joint account can withdraw from the account and deposit to it. Usually, joint accounts are shared between close relatives or business partners.

Joint accounts are often created in order to avoid probate. If two individuals open a joint account and one of them dies, the other person is entitled to the remaining balance and liable for the debt of that account.

PS-Dear Nagesh - if your problems still exist call me.
nagesh kini
Replied to Colonel Arun Gupta comment 9 years ago
I've no problem Col.
You've done it absolutely right by providing direct quotes from the relevant RBI circular, which are unambigious and crystal clear. The bank officials defaulting need to be hauled over the coals for unnecessary harassment.
Colonel Arun Gupta
9 years ago
Dear Sirs,

I also have had some interesting anecdotes to narrate concerning the Banking and Financial Sectors. Perhaps each incident can be worth an article or so. However, all these incidents bring out one lesson very clearly: If you are prepared to do your homework and pursue your grievance with the appropriate authorities, nobody can take you for a ride.

In my first skirmish with a Nationalised Bank a few years back, they refused to pay me the interest on a decade old fixed deposit. This was despite my clear instructions on the subject (for renewal for a 10 year period in 1997). It was after my complaint to the CMD of the bank and involving the Banking Ombudsman; the FD was renewed retrospectively for 10 years at the interest rate prevailing in 1997.

In another incident, wrong advice by an official of a Bank (concerning my FDs) resulted in a financial loss of almost 40K. Complaints at GM level did not work. However, a complaint to CMD of the bank; involving the Banking Ombudsman; and vigorous follow up, the Bank Official was held personally responsible by the Head Office of the Bank and was ordered to make good the loss.

Another incident involving a leading life insurance company resulted in the insurance company reimbursing me to the tune of 60K.

I came across your article while doing a Google search when a Nationalised Bank refused to close a Joint account (Either or Survivor) where my Late wife was the first holder & I was the second holder; the account balance was NIL. I had submitted the Death Certificate and a copy of my late wife's will as well (Bequeathing everything to me) to them and a request letter.

Similarly in another Joint account (Either or Survivor) where I was the first holder and my Late wife the second, the Bank refused to delete her name from the account. To add insult to injury they even refused to allow me to change the nominee without signatures of both myself and my late wife. When I asked the manager as to how can I get the signatures of my Late Wife without going to heaven and being reborn, he simply replied that he cannot flout Bank Rules. This was simply preposterous and belied all logic.

That evening I came back home feeling a bit frustrated and peeved; did the Google Search, found your article, down-loaded the Master Circular on Customer Service issued by RBI dated 03 Nov 2008, read all 93 pages, browsed the Bank's website for information on the subject and generally educated myself on the rules. Next day (Sunday) I sent a SMS to the Manager to call me back as his phone was not reachable. He called back in a couple of minutes.I apprised him of your article and the RBI Circular and asked him to take appropriate action on my requests. He requested me to mail him the copies of both. The action was completed the very next day itself. Of course the threat of an RTI also helped.

Your magazine is doing a yeomen service in the field of educating the people. However, there is a need to be pro-active so that the common man can approach the right person for redressal of his grievances.

Colonel Arun Gupta (Veteran)
Certified Financial Planner
[email protected]
Mob +91-9810104100
nagesh kini
Replied to Colonel Arun Gupta comment 9 years ago
Dear Col.,
You seem to a gold mine for bank and insurance harassments!
You do need to make them out in short writeups that can serve to wake up the Regulators - RBI and IRDA.
It is rightly said - "Latho ke booth batho sey nahi manathey". It is so true. People like you ought to rise in raising your voices. Once shaken things do move!
All the best.
nagesh kini
9 years ago
The HDFC Bank needs to answer as to how they will deal with ECS credits for interests and dividends and debits for utility payments that are standing instructions issued long back and will continue to remit to the account in their record.
That's precisely why the existing account with only the name of the deceased deleted and that of the nominee is addedis required to continue undisturbed. It is plain and simple common sense.
At the most the Customer Services Department/CSD of the RBI needs to reaffirm this by clarifying on its earlier Master Circular.
The HDFC Bank top management blaming the Core Banking or Finacle is just nonsense.
I've had a lenghty discussion on this very issue with a senior banking programming expert from TCS. He tells me that deleting the name with duty authority is no big deal and the anamolies/ glitches if any in the system can easily be rectified as required by the bank managed.
This matter needs to be taken up de novo with the HDFC Bank as well as RBI CSD.
Colonel Arun Gupta
9 years ago
Master Circular on Customer Service - 03 Nov 2008
Replied to Colonel Arun Gupta comment 5 months ago
Thank you so much, I have gone through your post and feeling better and motivated to pursue and get my money back from Bank
Saptashree Bondal
1 decade ago
HDFC Pune is still making the same "mistake" and I am just the latest casualty. I recently had to open a separate account in my name after I was "blocked" from the Joint Account held in the names of both my parents and myself as my Father- Primary Account holder - recently passed away. My Mother had earlier passed away in late-2009 but her name was still part of the account. The HDFC Officers acted as though they are experts on RBI rules on such matters.

Why is it not possible for RBI to ensure that these "esteemed" banks, esp. one as well known as HDFC, actually know the RBI's rules before causing their innocent and helpless customers even more trouble? I now have to write to every single company/fund house in which my family holds shares/units to request them to change bank details - just as given in the above article.

How can India ever be a real "superpower", esp. in the world of banking and finance, with such ignorant people running/working in supposedly well-run banks??
nagesh kini
Replied to Saptashree Bondal comment 1 decade ago
You can complain to RBI Customer Service [email protected]
Saptashree Bondal
Replied to nagesh kini comment 1 decade ago
Thank you very much for your advice, Mr. Kini. I will do so promptly.
Replied to nagesh kini comment 1 decade ago
In my case I wrote to the sbh compaint email id given on their website.I got prompt reply and the mail was forwarded to DGM mumbai.

Next time when I went with the mail of DGM mumbai, the problem was solved and they allowed me to 'add' my name to my mothers account.Thus making it a joint account

What happens in such cases is people at the branch are lazy.As Mr. Kini pointed out, there are generally technical problems with their back end provider.The software probably doesn't allow for deletion/addition of name.The branch and bank won't get these softwares updated, because third party software providers will probably charge them.So they take the convenient route and ask the customer to open a new account.

You case is deletion of name.Please refer to this circular to know what RBI rules state

Then write a detailed email(attaching scan of death certificate etc.) and send complaint emails to hdfc bank authorities.Tell them that opening a new account is not feasible coz of sending the account nos. to many companies.

They will probably reprimand officials at branch and your problem might get solved.This worked in my case.
Saptashree Bondal
Replied to Vimal comment 1 decade ago
Thanks very much for your valuable input, Mr. Vimal. Really appreciate your help and Mr.Kini's too.
Nagesh KiniFCA
1 decade ago
It is not that the Banks are violating RBI directives.
Catholic Syrian Bank told me that their Finacle Platform has not provided for formal DELETION of names even though they take on record the death after submission of the Death Certificate and make a mention of it by way of a note on the account, the name of the deceased continues.
The account without requiring it to be closed has be continued on account long standing ECS In and Out.
The deletion will have to take place in the event of legal separations like divorce.
Long after one of the depositors is death they insist on the signature of the dead one and say they are helpless even after being told that he is 'upstairs' and the death certificate is the only document and Yama Raj's back office is not programmed to confirm this!
The post-Damodaran RBI has to implement this by bringing in a appropriate programme amendments incl. Finacle which should not be an issue.
1 decade ago
SBH is not allowing my mom to convert her single account to joint.Its saying the same thing." close this account and open a new joint account."I read the master circular on customer service issued by RBI(

In point 5.8.8 it does talk about allowing customers to add or delete names.But the point is valid for only term deposits.(fixed deposits).Can you reference me to the exact circular point where RBI mentions addition of name by single account holder to convert it to Joint account.
Replied to vimal comment 1 decade ago
Here I was talking about converting single savings account to Joint account.
Nagesh KiniFCA
1 decade ago
This has happened with me with two banks.
According to them their Finacle program had no provision for deleting of names including those on dead clients on either or survivor basis nor can they add the names of the nominee. This was possible in the manual system. The core banking ought to be revisited to bring about this correction that is absolutely warranted today. I entirely concur with Mr. Agashe's stand.
Sharad Phadke
1 decade ago
Basically RBI is the worst controlling authority over the Banks. Yes, they do make some good rules but then there is no action or control over these rules. If asked under RTI they just reply our circular it self is our rules,regulations, norms, guideline, there are no time limits set, no audit has been conducted on this and so many like this. They have just given the guidelines to Banks! If it is to be adhere then adhere other wise we will look for the bridge when we come to it.
Now the question is how to force RBI on one of such circular?
All the information supplied is true and so no question of going to CIC and getting them enforcement order.
If complaint to Ombudsman he never acknowledge even your mail.
So experts retired from RBI should guide or can suggest remedies on problems with RBI.
In one of my RTI they have said "We have not done any audit under the " Payment & Settlement System Act"
So how do you expect HDFC to adhere to rules? HDFC/ICICI and all other banks including PSU are there to squeeze money from you for one reason or other and make profit.
Replied to Sharad Phadke comment 1 decade ago
Dear Mr Phadke

Many thanks for your interest in this. Actually, we at Moneylife have followed this up with the RBI. And I must tell you that RBI is far better than SEBI or IRDA...

RBI has already asked HDFC Bank to change the rules, is what we understand from our sources. The bank's answer is surprising and unacceptable. And its not the first time either!
best regards
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