The Reserve Bank of India has recently clarified that its circular dated January 13, 2014, on the above subject is not intended to mandate banks to routinely insist on the appointment of a guardian from all the mentally ill persons “who is in need of treatment by reason of any mental disorder”.
Under the sections 53 and 54 of Mental Health Act1987, it is essential to appoint a guardian (and in some cases Managers) for the mentally ill persons. All the banks in India, therefore, insist for the orders or certificates issued by the competent authorities (The district courts and collectors of districts) for opening and operating account by mentally ill persons. This is also in terms of above said RBI circular.
The apex bank explained in this regard that it would be necessary for banks to ask for the appointment of a guardian only in such cases where they are convinced on their own or based on documentary evidence available, that the concerned person is mentally ill and is not able to enter into a valid and legally binding contract. It is mentioned in the latest circular that in cases of doubts the banks may go for legal advice to avoid the situation of possible litigation at a later date.