Meaning & Operations of Joint Account Holders

A joint account is a bank account held in the name of two or more persons opened for reasons like convenience or joint control of funds.

Banks have several deposit schemes that can be customized for people with varying needs. Deposit accounts can be opened by an individual in his own name (single account) or by two or more individuals jointly (joint account).

Banks offer different types of joint account relationships. Here are a few:

1. Either or Survivor

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.

2. Anyone or Survivor

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 die, 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.

3. Former or Survivor

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.

4. Latter or Survivor

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.

5. Minor’s Account

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.

Things to remember: 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 are no more, the legal heirs of depositor/s will get the funds.

Individuals jointly running a business can open only a current account for business transactions. In case of current accounts, only the person authorized by the company / management will have the authority to operate the account.

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.

Financial transactions through net banking, will be available if the mode of operation is indicated as ‘either or survivor’ or ‘anyone or survivor’. The user of net banking in that case should either be the sole signatory or the authorised to act independently. User-ID and password for net banking will be issued to all account holders on request.

Those who enter a joint account should be aware that all partners are liable for all the dealings in an account as a single or joint entity. So joint accounts should be opened only with someone you can trust.

Individual accounts may meet court restrictions and delays on the death of the account holder, in the absence of a nominee. This is not the case in a joint account where the survivor of the account is entitled to the balance, without any legal restrictions.