Page 36 - Banking Finance November 2022

ARTICLE

EITHER OR

SURVIVOR =

NEITHER

recent incident faced by a friend threw up the the full implications of the mode of operation in bank fixed
A question of sanctity of an E or S clause in a bank consequences, the common man is even more prone to
deposits. If a retired bank official failed to grasp the
fixed deposit. The friend, a retired senior officer
suffer a lack of understanding and clarity in the matter. Thus
from SBI, lost his wife and he subsequently
sought to pre-maturely encash his FDs jointly the widely held belief viz. repayment on demand by either
held under E or S mode of operation with his late wife. To is now passé.
his consternation, the bank refused to encash the FDs on
the grounds that premature encashment requires signatures The public belief stems from not only a literary meaning of
of both the joint account holders. On pointing out the E or E or S but also practices followed by banks. In the definitive
S terms of the deposit, he was advised that the E or S Tannan's Banking Law and Practice in India, 18th Edition
mandate came into play and was effective ONLY at the time (Re-print 1996), at page 195, it is said thus:
of maturity, neither sooner nor later. The depositor had no
option but to wait for the date of maturity to get his money "Banks have now accepted the view that in an account,
back. where the operation is by

This incident shows that many people still do not understand "Either or Survivor", the survivor is the only person who is
entitled to the balance thereof after the death of one of
About the author the account holders. This practice is based on the principle
that the terms of operation form part of the contract of
P M Bhatnagar
deposit." This precept that any FD held jointly with a
Retired DGM from SBI with last posting as
survivorship clause will, in the case of demise of anyone,
Special Secretary to the Chairman SBI,
automatically devolve on the survivor(s) is well established
Corporate Centre, Mumbai.
and has been uniformly upheld by courts. Any payment by

36 | 2022 | NOVEMBER | BANKING FINANCE