The clause of confusion in Senior Citizens Savings Scheme
Friday, June 23, 2006 19:50 IST
Draconian clauses: Anguished by the clauses of the Senior Citizens Savings Scheme, LK Chaubal urges NGOs to file a PIL.
Anguished by the draconian clauses of the Senior Citizens Savings Scheme, advocate LK Chaubal urges NGOs to file a PIL against the finance ministry
The Central Government introduced an investment scheme for seniors, effective August 2, 2004, and formulated rules called Senior Citizens Savings Scheme Rules 2004. According to the scheme, any person aged 60 years or above can open an account in any post office or bank authorised by the Central Government, and receive subscriptions under the Public Provident Fund Scheme.
A depositor may operate an account subject to the rule that the total deposit in all accounts does not exceed Rs15 lakh. The deposit matures in five years from the date of deposit and provides interest at 9 per cent per annum, payable quarterly. A depositor may open the account in his/her individual capacity or jointly with his/her spouse.
The scheme also has provisions for a retired person, 55-60 years of age, to open an account. The depositor can, at any time but before the maturity of deposit, nominate a person or persons, to receive the entitled payment due on the account. Nomination facility is also available in the case of a joint account with the spouse.
Issues: In case of nominations, the spouse will be the first person entitled to receive the amount payable after the death of depositor. The nominees claim shall arise only after the death of both the depositor and spouse.
The nomination form provides multiple nominations with shares, creating the false impression that the depositor is disinheriting his legal heirs. It also seems that the depositor is giving the bank a mandate to give the amount to a third person after his death.
The legal aspects of nomination are ambiguous. In law, the nomination is not a gift or a will. The nominee receives the amount as a trustee and he has to distribute the amount amongst the heirs of the deceased. This legal position has been established in several judgments.