Have you ever come across a Mode of Operation while opening a new account? It can be a savings bank account or a current account. The mode of Operation in a bank account is a necessity that every account holder has to declare.
It enables you how to access your bank account in various ways. A bank account can be of many forms- single account, joint account, business account, company account, government account etc. Mode of operation gives a mandate on how these accounts will be operated.
What Is the Mode of Operation?
It is a mandate you give when opening a bank account. It can be any sort of bank account, savings or business account. Executing the mode of operation in a bank account, lets you pick the means to access and operate the account.
It is quite common in normal banking transactions and it is essential too. Without giving a proper mandate to your bank, they may not allow you to operate your account. Weird it may sound, but it’s essential for the bank account to run smoothly.
You might find different ways to do it. Just for example- An account in a single name is usually a single operator by default and an account in a joint name has multiple account operators. That’s where the mode of operation comes in.
Below is a part of the account opening form. You may find a section where you need to select the mode of operations when opening a bank account.
Types of Mode of Operation in Bank Account.
As the name suggests, it describes how your account will be operated and by whom? When you are about to tick your choice you will see these options.
|3||Either or Survivor|
|4||Former or Survivor|
|5||Anyone or Survivor|
|6||Jointly or Survivor|
|7||Latter or Survivor|
|8||Power of Attorney|
Your savings bank account is probably a single mode of operation. When you add or join another person in your account, it becomes a joint account that can be operated according to what you have mandated with the bank.
There are other types of accounts that are in the nature of joint operations. It can be a government departmental account or societies account. These accounts need a specific mode of operation. Without it account operation is impossible.
The common types of operation listed above can be easily executed when filling out the account opening form. Whenever there is a change in the organisation about the terms and conditions of operating the account. You should contact the bank and update accordingly to avoid the rejection of the account operation.
Single or Self
It is meant for a savings bank or current account which is in a single name. It is also applicable to a safe deposit locker account.
Cheques will be signed by the account holder himself. A proprietorship’s current account will be under a single operation.
Other than cheques, any amendments request such as ATM card request, chequebook application, KYC updates etc in the account will be signed by the account holder only.
Jointly Operated Account.
In a jointly operated account, the mode of operation is by all the account holders. They are required to sign in all the financial and non-financial transactions in the account.
A savings bank account can be operated jointly amongst family members, amongst friends, or non-personal savings bank accounts such as government accounts, departmental accounts etc.
Whereas current accounts such as partnership firms, company accounts, trust accounts etc are normally operated jointly.
Either or Survivor
‘E or S’ is a kind of Mode of operation where either can sign to do financial as well as non-financial transactions.
When Mr A and Mrs A have a joint account with Either of Survivorship clause, they can operate the account with anyone of them.
When it is ‘E or S’, there is no need to appoint a nominee to the account. As if anyone dies the Survivor can continue the account. This applies to savings bank accounts and safe deposit locker accounts.
Former or Survivor
In the ‘F or S’ type of mode of operation, the former will operate the account as long as he is alive. When he expires, the Survivor becomes active and continues using the account.
Account open in the name of the father and the son. Father is the primary account holder- Former will continue operating the account. When he expires, the son who is a secondary account holder will continue using the account.
Anyone or Survivor
This one is somewhat similar to ‘E or S’. In ‘E or S’ there are only two-person involved. Whereas in the Anyone or Survivorship account, there can be more than two-person.
Anyone can operate the account. If a person is deceased the survivors will continue using the account.
Jointly or Survivor
If any of the account operators/holders dies, the account will be operated together by the remaining operators with the survivorship clause in place.
Later or Survivor
The Latter or Survivorship clause works just opposite to the Former or Survivorship clause. Here the latter operates the account as long as he is alive. The other party will be entitled to the rights only when the latter expires.
Operated Under Power of Attorney.
The operation of the account will be appointed by the account holder/holders. A single person can be allowed to operate the account in their favour. The appointee may get the transaction rights such as cash deposit, withdrawal and fund transfers. But he will not be entitled to make changes in account details.
This sort of mode of operation is seen mostly in company accounts and other governmental accounts. The organisation appoint one of its employees to represent in favour of them. He is given certain limited rights to operate the account.
To make it happen, Power of Attorney has to execute in which the terms of using the account are clearly mentioned.
Changing Mode of Operation.
The account operation can be set as per your need. Earlier you have chosen ‘Either of Survivor’ as an account mandate. Now when you want to change to other forms of operation, can it be done? Yes, you can do so…
There is a simple format for that. Just fill out the form and submit it to the bank. Your bank may ask the reason which you have to provide but there should be consent from all the account holders. It is simple to change it when it is a family joint account where getting signs of each user is easy.
On the other hand, it is quite difficult for an organisation account. It would take board members to take fresh resolutions and make changes to certain other things. Though at the end of the day, it may take time but it will be done.
Of all the Mode of Operations, it is clear how important it is to mandate the bank about how the account will be operated. If not properly, the operation will be jointly by default if it’s a joint account and single if it’s in a Single name.
So go ahead and check once more if your account is properly updated with the exact mode of operations you want. Else, it’s kind of frustrating when banks deny you to access your own account.
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