A single account holder can withdraw a joint bank FD prematurely; here’s how it works, and should you go for it?

Normally, banks do not allow premature withdrawal of a jointly held fixed deposit by a single holder even if the deposit is held on an ‘Either or survivor’ basis. In such a situation banks normally require signatures of both/all holders. However, what if the first holder or any one of them needs the funds urgently in a situation when the other holder is not available to sign?

In such situations, quick access to one’s own funds (the fixed deposit) becomes difficult even in an emergency. There could be a situation in the current pandemic where one of the holders is hospitalised and the other needs to draw the funds immediately for funding the medical expenses. So investors should be aware that some banks have started offering a solution.

Generally, for premature withdrawal of a jointly held FD, banks require the depositor to produce signatures of all the joint account holders despite the FD having mode of operation as ‘either or survivor’ or ‘anyone or survivor’ or ‘former or survivor’. However, of late, various banks have started relaxing the rules with regards to premature withdrawal from jointly held FDs.

Here is all you need to know about how a single holder in a jointly held FD can withdraw funds prematurely without the other holder’s signature.

Many prominent banks are allowing premature withdrawal by single account holder: Here’s how

Here are some of the prominent banks that now allow premature withdrawal of a jointly held fixed deposit by a single account holder.

ICICI Bank allows single account holder to make premature withdrawal from a joint FD having mode of operation as ‘Either or Survivor’ or ‘Former or Survivor’. However, for this all the joint account holders must give their prior consent for the same. The bank also has a mandate form for this which all the joint account holders need to sign either at the time of opening the account or any time later (before the premature withdrawal) authorising any single account holder to prematurely withdraw from the joint FD.

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Axis Bank allows premature withdrawal by a single account holder as per the operating instructions of the FD if it is approved by all joint holders. This approval can be given at the time of opening the joint FD account or joint holders may give their consent any time prior to withdrawal.

IndusInd Bank allows a single account holder to prematurely withdraw from a joint FD. The FD opening application form states, “In case of joint Term Deposits having operating instructions as ‘Either or Survivor’, ‘Anyone or Survivor’ or ‘Former or Survivor’, the Bank shall repay the deposit(s) before maturity of the deposit(s) in case such a request is received in accordance with the operating instructions of the respective deposit(s), along with relevant documents as may be specified by the Bank from time to time”.

Going by HDFC Bank’s FD account opening forms, it seems like the private sector bank also offers the feature where a single account holder can prematurely withdraw funds. ET Online made multiple attempts spanning over 10 days to get a clarification and response from HDFC Bank, however, the bank did not respond. Nevertheless, HDFC Bank’s account opening form has the following clause under which this premature withdrawal feature appears to be available..

Premature RePayment and SuperSaver will be allowed as per Operating Instructions.

I/We authorize Bank to repay “all joint Term/Recurring Deposits” before maturity by crediting our Bank account grant “SuperSaver” “in case, a request(s) is/are received in writing from either or anyone of the undersigned joint account holder(s) and/or requested using net banking facility, subject to submission of relevant documents required & rules and guidelines prevailing during the relevant period Applicable only to Either / Anyone or Survivor and Former / Survivor MOP.

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Not all banks are offering this feature

While many prominent banks are offering this premature withdrawal feature however not all banks allow this facility. For instance, Federal Bank does not allow any such mandate and hence, does not allow premature withdrawal of a joint FD by a single account holder.

“If customers are alive, we cannot allow a customer for single withdrawal unless some court order is produced,” says Sobha M, Vice President & Head-Service Quality, Federal Bank.

Mind the risk that comes with this flexibility

If you opt for allowing a single person to prematurely withdrawal from a joint fixed deposit with mode of operation ‘either or survivor’ or ‘anyone or survivor’, then it will always bear the risk of breach of trust. Any account holder can approach the bank to ask for withdrawal without informing the other depositors.

It will also provide a level of protection against forgery as any forger needs to forge the signatures of the all joint account holders. However, in case the premature withdrawal requires the signature of just a single accountholder, then it is easier for the fraudster since only one signature will have to be forged.

What should you do?

The facility of premature withdrawal by a single account holder of the joint FD provides the much-needed option for liquidity in times of an emergency. Especially when it comes to medical emergencies like in the case of the second wave of Covid-19 where the huge medical expenses were unavoidable and the accountholder might not have been in a position to get signatures of all holders for a premature withdrawal. . So having an option where you can decide beforehand whether to have this feature or not helps you plan your personal finances better. However, be aware of the risks of the feature as mentioned above.

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If you are going for this feature, you should have proper understanding of why you want this feature in your FD. If it is for succession planning, then you don’t need such a clause as survivors will anyway get access to the funds in case of demise of one or more account holders. However, if it is access for emergency funds, then you need to define the purpose and quantum.

If it is a joint FD held with family members, then it could be for medical emergencies. For instance, if you have total FD of Rs 1 crore you would need only a part of it for medical emergencies. So rather than keeping one big joint FD you can book an FD of Rs 20-25 lakh with premature withdrawal feature so that any family member will get emergency access, while you can keep the rest of the FD without allowing premature withdrawal by a single account holder.

Similarly, you can divide the FDs which are held with business partners and keep only a part of it for emergency premature withdrawal. Last but not the least, it is important to ensure that this feature is used only with people whom you can trust completely.



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