The Reserve Bank of India (RBI) has announced new rules to make it easier and faster for families of deceased bank customers to settle claims.
As per the revised norms, banks will now have to settle claims related to accounts and lockers of deceased customers within 15 days. RBI has also directed banks to compensate nominees if there is a delay in settlement.
The new framework has been introduced to remove the confusion caused by different practices followed by banks earlier. RBI said that banks must not insist on legal documents such as succession certificates, letters of administration, or probate of will when making payments to nominees or survivors.
Similarly, banks cannot ask for bonds of indemnity or sureties from nominees or survivors, regardless of the amount in the deceased customer’s account.
SETTLEMENT IN CASES WITHOUT A NOMINEE OR WILL
In cases where the account does not have a nominee, will, or where there are contesting claims, banks will be allowed to settle claims up to Rs 5 lakh for co-operative banks and Rs 15 lakh for other banks.
For this, claimants will need to submit a simple RBI-specified form, the death certificate of the deceased, and verified identity documents.
Banks will also require an indemnity bond from the claimant and, if needed, a no-objection from other legal heirs. A legal heir certificate issued by a competent authority or a declaration given in RBI’s specified format by an independent person well known to the deceased’s family can also be accepted.
CLAIMS ABOVE RBI LIMITS
If the claim amount is above the specified limits, additional documents will be required.
These include the succession certificate, death certificate, verified identity of the claimant, indemnity bond, and no-objection from non-claiming heirs.
If no succession certificate is available, claimants can provide an affidavit in RBI’s format sworn before a notary or judge by an independent person who is familiar with the family.
CASES WITH A WILL OR BENEFICIARIES
When a will is present, but there is no surviving nominee or when a person other than a legal heir is named as the beneficiary, banks will need to collect all relevant documents from the beneficiary. If there are disputes among legal heirs or beneficiaries, claims will only be settled on the basis of a court order such as a probate of will, letter of administration, succession certificate, or decree.
If a court has issued an order restraining the bank from making payments, claims will not be processed until the order is lifted. RBI clarified that settlement can be done only after receiving a subsequent court directive.
RBI has also allowed banks to permit premature closure of term deposits of deceased customers without charging any penalty, even if the deposits are within the lock-in period.
The central bank has asked all banks to put these new procedures in place by March 31, 2026.
These measures aim to reduce the stress faced by families of deceased account holders and bring more uniformity in how banks handle such claims.
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