Some people are unable to hold pens, which results in signature differences
Every individual in the age group of 60+ years who is not well-versed with digital banking and continues to follow conventional branch banking needs to take pre-emptive action. It is imperative that such individuals initiate a signature update exercise at the earliest for all their investments in financial assets; predominantly banks, depository participants (demat) and mutual funds (if held in physical form).
With advancement of age, loosening of grip and depleting strength of fingers is common. Some are unable to hold pens, which results in signature differences, while others cannot navigate the movement of the hand. Signature mismatches pose administrative challenges. In some cases, the asset owner may be refused access to his/her own funds by the asset custodian.
Banks have been a common destination for senior citizens and the relationship with over-the-counter officials over time enables handling signature differences on the foundations of a trust relationship. However, officials are prone to transfers and with consolidation and mergers, rationalization of bank branches has happened and hence visits have become rare with branch relocation. Apart from covid, with age and possible deteriorating health, the senior citizen may not be able to visit the branch and hence the problem of signature mismatch gets pronounced and cheques could be refused from being encashed across the counter. Banking regulations insist on signature differences being witnessed/countersigned by a banking official who knows the signatory.
In case of savings bank accounts, safe deposit lockers and fixed deposits, there are established processes and procedures laid down by the regulator and banks have been handling the situations effectively on a case-by-case manner. However, the matter becomes complex with other financial instruments like demat and mutual funds, especially in case of redemptions.
The National Securities Depository Ltd (NSDL) in its master circular on account opening and Central Depository Services Ltd (CDSL) as per compliance manual have dealt with account opening by clients who are either illiterate or blind. CDSL has dealt with account opening by temporary disabled as well. Only NSDL stipulates a procedure to be followed in case a client has paralysis, Parkinson’s, etc. This is the only portion that refers to the use of fingerprint (thumb impression) for account holders.
While both NSDL and CDSL uniformly state left-hand thumb impression in case of males and right-hand thumb impression in case of females, in practice, it is a difficult task to get the same implemented at the ground level with operating teams at depository participants (DPs).
My clients, a mathematics professor and his wife, a renowned gynaecologist, are based in Nagpur. Both are around 75+ years of age. They have a trading account with a stockbroker. For the sale of securities, they have to instruct their broker, sign the delivery slips and submit the same for the completion of transaction.
Recently, they decided to monetize part of their equity investments, but they were warned by their CA that their signatures may not align with the old ones as their hands were not stable as before. Hence, they decided to replace their signatures (registered at the DP) with thumb impressions. After securing a medical certificate on their inability to sign, they approached the DP (under NSDL) with the request. Unfortunately, the DP was not conversant with the procedures and it took around a month to confirm with the bosses. Due to age, the thumb impressions were not easily captured and the DP was not ready to accept the same.
Hence, the couple visited the sub-registrar for assurances and registered a power of attorney (PoA) where they used thumb impressions. This gave them the right to sign on each other’s behalf and additionally made one of their children as a constituted attorney on their behalf. They used their respective thumb impressions as the base signature, to put the same on record for future reference by counterparties. A notarized copy of the same PoA was submitted to the DP to address the previous unsolved issue. However, the DP continues to be unsure on how to proceed in this matter. Four months have passed and there has been no communication of either consent or dissent.
Senior citizens should update their signatures with custodians and intermediaries to prevent such problems from cropping up.
