GOODNEWS –  clarification issued by RBI to its Master Circular, clarifying that guardianship certificate under the Mental Health Act, 1987 is NOT mandatorily required for persons with mental illness to open/operate bank account.

I) Reserve Bank directed banks that they should not insist on guardianship certificate from all mentally ill persons for operating their bank accounts.

The RBI had issued a circular to banks in January 2014, advising them to take note of the legal provisions under the Mental Health Act, 1987 to open accounts for such people.

As per RBI directives, banks may rely or be guided by the order or certificate issued by the competent authority to appoint guardians or managers for opening or operating of bank accounts.

“It has been brought to our notice that banks are insisting on guardianship certificate from all mentally ill persons”, RBI said in a notification.

The banking regulator clarified that its earlier circular was not intended to mandate banks to insist on appointment of a guardian as a matter of routine from every person “who is in need of treatment by reason of any mental disorder”.

“It would be necessary for banks to seek 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”, RBI added