Fixed Deposits – Renewal of fixed deposits cannot be made in the name of different constituent other than original depositor. [Banking Regulation Act – Section 45ZB].

Father, mother and son had different Kamdhenu Deposits made in the year 1996. These deposits were cumulative deposits i.e. the interest accruing is ploughed back and upon maturity, the entire cumulative amount is paid. They were to mature for payment at the end of one year i.e. in 1997. None of the three parties approached the Bank for either renewal or encashment of the said deposit certificates, it lay with the Bank. In other words, the money remained with the Bank. For the first time in the year 2002, the parties approached the Bank for renewal of the deposit receipts. This time the Bank refused to renew the receipts with effect from the date of its original maturity, though they were agreeable to renew the same for the matured amount from the date when they applied for renewal in 2002. However, the head office of the Bank examined the matter and directed the Bank to renew the certificates in relation to the son with effect from the date of its maturity on rate of interest prevailing in that period, but when it came to father and mother the Bank took a stand that it will not give the same treatment.

The Division bench of the High Court held that there is no plausible explanation why in case of the son the Bank agreed to renew for five years retrospectively and grant interest at the then prevailing rates, but when it came to his father and mother why the Bank took a different stand. Therefore, the Court held that the direction of the learned single Judge which is virtually directing that same treatment has to be given to the parents cannot be faulted with, but there was a problem i.e. due to subsequent events. It is not in dispute that during pendency of the writ petition, mother had died on 13-10-2010. Thus, renewal could only be up to that period and not beyond that. There cannot be a renewal in name of a different constituent, than the original applicant, as that would be a fresh deposit. To accept or not to accept fresh deposit is Bank’s discretion and that would also depend upon the claimants upon death, establishing their rights in absence of nomination. Father died on 17-9-1998, and it is for the first time in 2002 that renewal was sought by one of the sons. There could be no renewal in his name. To that extent, we are of the view that after the death of father, the K.D.R. receipt could not be renewed as there is no proof of the fact that renewal or maturity claim was led by all the heirs completing all formalities. The Court further held that if all the heirs claim payment consequent to encashment, Bank would pay the same as per their joint claim in the shares they desire.