RBI new guidelines grant banking rights to queer couples, marking a milestone in financial inclusion. The challenge now lies in effective implementation, especially in semi-urban and rural banks.
People in the LGBTQIA+ community and those in queer relationships cannot be barred from creating joint bank accounts, the Union government stated in an advisory issued this week, emphasizing that they can also select one another as beneficiaries.
This follows a year after the Supreme Court of India directed the Union government to examine extending equal rights to partners in homosexual relationships, in a decision that rejected to recognize same-sex marriage.
Among other considerations, the Supreme Court’s October 2023 ruling instructed the government to examine allowing partners in a queer relationship to have joint bank accounts and designate each other in the event of death.
Government Advisory
As a “clarification” in relation to the judgement, the Department of Financial Services released the advisory on August 28. According to the statement, “There are no restrictions for members of the LGBTQ community to open a joint bank account and nominate a person in a queer relationship as a nominee to receive the balance in the account, in the event of the account holder’s death.”
It further stated that on August 21, the Reserve Bank of India sent a clarification on the subject to all Scheduled Commercial Banks.
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Prior to the Supreme Court judgment, some private banks had already been allowing individuals in queer relationships to open joint bank accounts. Axis Bank, for instance, expressed support for the Finance Ministry’s advisory, noting that it “seamlessly aligned” with the bank’s inclusive banking initiative.
Since September 2021, this initiative has enabled LGBTQIA+ individuals in same-sex relationships to nominate each other as beneficiaries and open joint accounts.
Committee and Implementation
Earlier in April this year, the government set up a six-member committee to define and elucidate “the scope of the entitlements of queer couples who are in unions”, in accordance with its submission to the Supreme Court. It is chaired by the Cabinet Secretary and also includes the Secretaries to the Ministries of Home Affairs, Social Justice and Empowerment, Law and Justice, Women and Child Development, and Health and Family Development. The committee’s mandate also allowed it to “co-opt experts and other officers if deemed necessary”.
The panel held its first meeting on May 21, according to the Social Justice Ministry’s report to Parliament. This was followed by a sub-committee meeting on May 31, with the initial round of stakeholder consultations taking place on July 25.
Long Standing Demand for Justice
Indian queers have long faced significant disparities in accessing banking rights compared to their cisgender, heterosexual counterparts.
Activists have consistently highlighted that securing banking rights is essential for the financial security of the LGBTQ+ community, helping shield them from economic hardships.
In addition to this, the community has also advocated for broader demands, including marriage equality, workplace equality, and the enactment of an Anti-Discrimination Law.
Queer couples often live outside traditional family structures, with many estranged from or distancing themselves due to natal family violence.
Until now, in the event of a partner’s death, banking rights would typically pass to their biological family rather than their partner(s).
This context makes the recent clarification from the RBI and Finance Ministry particularly significant, with the community widely celebrating it as a ‘big win.’
While banking equality is a crucial win for any society and this clarification is a significant step toward ensuring equality for all citizens, queer or not, the true test will be in how these changes are implemented on the ground, especially in semi-urban and rural banks across the country.
