Can your family members access your bank account during a crisis?

Banks have laid down strict norms for operating a savings account. While it is good that there such restrictions, sometimes these turn out to rather painful and rigid.

For example in case of an accident or some critical illness it may become impossible for your family members to access your bank account for your treatment. Find below how a savings bank account operates and how you can provide for a hassle-free charge of your account to your family.

It is always a good idea to file a nomination at the time of opening a bank account. The benefit of nomination is that in the event of death of an account or locker holder, the bank can release the money in the account or contents of the locker to the appointed nominee and won't insist on other documents like succession certificate or a legal heir document. However, it should be noted that the bank will only give the nominee charge of the proceedings or money when the account holder dies. If the account holder is, say on life support or in a coma, the bank will not give the charge to the nominee. To tide over such situations it is better to open a joint savings bank account.

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

  1. Either or survivor: In this type of mandate, both the account holders can operate the deposit account and will have complete charge. Here, signature of both the depositors is not required.
  2. Former or survivor: In this case, the 'Former', i.e. the first holder, alone can operate the account, when both the depositors are alive. Signatures of both the 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.

Operation of bank accounts by old/sick/incapacitated customers: According to Reserve Bank of India (RBI) rules, an account holder who is too ill to sign a cheque or cannot be physically present in the bank to withdraw money can use his thumbprint on the cheque or withdrawal form. This should be identified by two independent witnesses known to the bank, one of whom must be a bank official.

Settlement of claims of missing people: When it comes to a missing person, presumption of death can be raised only after a lapse of seven years from the date of his/her being reported missing. In such cases, the nominee or legal heirs are required to raise an express presumption of death of the account holder before a court.

One can also give a power of attorney (PoA) to a family member to operate your savings account on your behalf. A PoA empowers a person to perform certain acts on behalf of the other person, irrespective of his medical or physical fitness. This is especially helpful for children staying or posted abroad for a period of time when their parents can operate their accounts.

Crisis is unforeseeable, and to avoid financial hassles in such untoward situations you need to make sure that all the documentation are in place and are done in time. All of these facilities - nominations, survivor clause, and PoA - are all useful tools. Make sure you have them in place in your savings bank account to avoid heartaches in the future, especially during times when the last thing you want to do is run after bank officials.

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Sabyasachi Paul has been associated with equity research and advisory on equity markets in India for over 9 years & currently heads the equity research desk of Eastern Financiers Ltd, Kolkata.He also manages a portfolio on the online platform Kristal. Find link to the strategy named ‘The Tortoise’

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