When a married couple has a joint bank account, disputes often arise during divorce or separation, with each spouse claiming the money deposited in it.
To divide a joint bank account during a divorce, the safest approach is to open a personal account, stop any shared deposits, and review (audit) the funds in the joint account. Both parties should either agree on how to split the money or get a court order directing the split. Once that is settled, both spouses must give joint consent to close the account, and any automatic bill payments linked to that account should be redirected elsewhere.
Legal Framework Governing Joint Bank Accounts
Indian Contract Act, 1872
A joint bank account is essentially a contract between the account holders and the bank. Under Section 10 of the Act, such a contract must be lawful and entered into voluntarily by both parties. If one spouse misuses the account or withdraws funds unfairly, it may amount to a breach of this agreement, and the affected party can claim damages under Sections 73–74 of the Act.
Banking Regulation Act, 1949 and RBI Guidelines
Banks open and operate joint accounts based on the mandate chosen by the account holders — for example, “Either or Survivor” or “Former or Survivor.” These rules are governed by the Banking Regulation Act and related RBI guidelines. On this point, the Supreme Court in Anumati v. Punjab National Bank (2004) 8 SCC 511 clarified that an “Either or Survivor” clause in a joint account is essentially a tripartite arrangement between the bank and both holders that allows convenient day-to-day operation of the account. The Court held that this clause does not, by itself, give either spouse unilateral ownership or the power to deal with the funds (such as pledging a deposit) without the other’s consent.
Once a divorce is underway or finalised, banks will act only on the basis of a court order or the written consent of both account holders — not on the instruction of just one spouse.
What the Courts Say About Marital Funds
Indian law does not recognise “community property” (unlike some other countries). However, courts have specific tools to deal with jointly-held marital assets, including bank balances:
Section 27 of the Hindu Marriage Act, 1955 allows the court, while deciding a divorce or separation case, to pass orders regarding any property that belongs jointly to both spouses, or that was given to them at or around the time of marriage.
In Balkrishna Ramchandra Kadam v. Sangeeta Balkrishna Kadam (1997), the Supreme Court held that this covers property connected to the marriage even if it was given before or after the wedding — not just gifts received exactly at the time of the ceremony. This is the usual provision Family Courts in Kerala rely on when dividing jointly-held funds or jewellery between spouses.
For spouses married under other personal laws (such as the Divorce Act, 1869, applicable to Christians), similar relief can be sought before the Family Court under that Act’s provisions, alongside the divorce petition itself.
Steps to Divide a Joint Bank Account
- Audit and Freeze: Prepare a complete list of all joint and individual assets. If there is a risk that one spouse might withdraw funds without the other’s knowledge, apply to the court for an injunction to freeze the account.
- Redirect Income: Open a new individual bank account and have your salary and other deposits paid into it directly, instead of the joint account.
- Negotiate the Split: Decide on a fair division of the funds. Courts assessing claims under Section 27 of the Hindu Marriage Act (or the equivalent provision under other personal laws) will look at each spouse’s financial contribution to the account, any alimony or maintenance awarded, and outstanding debts, rather than applying a strict formula. If the couple cannot agree, either party can apply to the Family Court for an order on how the funds should be divided.
- Close the Account: Both spouses should visit the bank together and sign a joint account closure form. The bank will then release the remaining balance according to the written agreement between the spouses or as directed by the court order.
