18th February, 2019

Know when and how can your family member access your bank account?

In a recent incidence, a 63-year-old lady in Mumbai has a hard time to access her comatose husband’s savings account. It was more painful as she had to fund his treatment and care using the account proceeds.

The lady, after pursuing bank authorities, eventually had to approach the Bombay High Court to get herself appointed as his guardian. Such a tedious job as there is no specific legal provision to deal with the rights of such patients and their families.

We all exercise to choose a range of financial instruments to secure our future. From mutual fund investments to equity, insurance claims, salary, rental income, equated monthly instalments and what not – but whether we earn or spend, it comes and goes from just one account i.e. savings bank account.

Now, it is convenient when banks lay down strict procedures for operating a savings bank account. But the same procedures may sometimes turn out to be painful and rigid.

Well nobody wants to go through this.

Hence, IndiaHub brings to you the detail of how a savings bank account operates and how you a family take hassle-free charge of your account if any untoward thing happens.

Nominee to bank account

Don't forget to file the nomination and update it whenever required.  The option is available at the time of opening a deposit account. This facility is available to all account holders.

Declaring a nominee simplifies the procedure of settling claims of the deceased account holder for the nominee at the time of death or any time after that.

Please note that a nominee and legal heir can be different individuals. However, if there is no nominee, legal heirs become eligible for the money and final settlement.

The benefit of nomination is that in the event of death of an account or locker holder, the bank will release the money in the account or the valuables of the locker to the appointed nominee. Nominees don’t need to produce succession certificate or a legal heir document.

The nominees can be changed at any point of time as long as your deposit account or locker is functional.

The bank will only give the nominee charge of the proceedings or money only when the account holder dies. If the account holder is alive, or, on life support or in a coma, the bank will not give the charge to the nominee. 

Hence it is often preferred to operate a Joint savings account. 

Joint savings account

A joint savings bank account comes with a survivor clause and can be classified into the following categories:

a) Either or Survivor:

In this type of mandate, both the account holders can operate the deposit account. Both the account holders have complete charge of the account. Here, signature of both the depositors is not required. For instance, if husband and wife hold an 'Either or Survivor' account, either of them can fully operate it in the absence of the other.

b) Former or Survivor:

In this case, the 'Former', i.e. the first holder, alone can operate the account, when both the depositors are alive. The signatures of both depositors have to be obtained, if the deposit is to be paid before maturity.

In case of death of the first holder, the 'Survivor' or the second holder will get charge of the account.

However, the survivor will have to furnish the documentary evidence such as proof of death of the first holder, before taking charge of the account.

The second holder gets the charge of account under two circumstances:

  • if the first holder passes away, or,
  • if both the holders give joint application to change the mandate.

If the primary holder is alive, the bank is not authorised to give charge to the second holder. If a decree from the court is obtained, the bank can act accordingly.

So, should you open a joint account?

Well every coin has two faces.

The advantage of owning joint account is that it provides access to money to both holders whenever they need it.  The joint account is preferred by couples as it is easier for them to keep a track of their finances.

Also, in a joint account, if you have filed a nomination but have chosen the ‘Survivor’ clause, the bank will give the charge of the account to the survivor and not to the nominee.

The nominee becomes eligible for the proceedings when both the holders die.

A major drawback of a joint account is that it doesn’t give you the freedom over your finances.

Power of Attorney (PoA)

A PoA empowers a person to perform certain acts on behalf of the other person, irrespective of his medical or physical fitness. Besides, it is a more useful tool in estate planning and in transacting movable and immovable assets.  

Bank accounts by sick/old/incapacitated account holders

Reserve Bank of India (RBI) has in its rules that if an account holder is too ill to sign a cheque or cannot be physically present in the bank to withdraw money, he can use his thumbprint on the cheque or withdrawal form.

The thumb impression should be identified by two independent witnesses known to the bank, one of whom must be a bank official.

The incapacitated people who can’t come to the bank or can't give a thumb impression, can use a mark (it can be a toe impression or a mark which anybody can put on behalf of the person who has to sign), which should again be identified by two individuals, one being a bank official.

Bank accounts of missing people

In case of a missing person, presumption of death can be raised after a lapse of seven years from the date he/she has been reported missing.

The nominee or legal heirs are required to express presumption of death of the account holder before a court in such cases.

The procedure of settlement in missing person case may vary from bank to bank.