The Reserve Bank of India (RBI) has issued a draft circular with simplified and more humane guidelines for settling death claims in bank accounts.
This measure is expected to ease the process for nominees, survivors, and legal heirs while ensuring transparency and fairness. The new proposed rules include faster payouts, clear roles, simple processes, penalty-free withdrawals, etc. Here is the list:
Faster payouts
If a bank account has a valid nominee or survivor clause, the bank must release the funds immediately after verifying the death certificate and the claimant's identity. The RBI has emphasized that there is no need for additional legal documents such as succession certificates, probate, letters of administration, or indemnity bonds in these cases, as these only create unnecessary hurdles.
Clear role
The circular states that banks must inform the nominee or survivor that they are receiving the money as a trustee on behalf of all legal heirs.
Simplified process
In cases where no nominee or survivor clause exists, banks are advised to adopt a simplified method. They can set a financial threshold, below which claims can be settled with just an indemnity letter from the claimant, avoiding long legal procedures.
Penalty-free withdrawal
Banks should now include a clause at the time of opening fixed deposits, allowing the nominee or survivor to withdraw the amount before maturity without penalty in case the depositor passes away.
Handling inflows
If money such as pension, salary, or interest continues to come into the account after the account holder’s death, banks have two options:
- Open a new account titled “Estate of Shri ___, the Deceased” with the nominee’s/survivor’s consent. No withdrawals are allowed from this account.
- Return the funds to the sender with a note stating “Account holder deceased”, and inform the nominee/survivor so they can arrange for alternate payment methods.
Easy access to lockers, safe custody articles
Nominees or survivors should be allowed simplified access to lockers and safe custody articles, similar to the process used for bank accounts. Detailed guidelines for this will follow separately.
Strict timelines for claim settlement
The RBI has directed that all valid claims must be settled within 15 days of receiving the death certificate and ID proof. Any delay beyond this timeline will not be acceptable.
Transparency, monitoring
Banks must regularly report the status of death claim settlements to their Customer Service Committee, including data on received claims, pending ones, and reasons for delays.