Banks have made nomination compulsory for depositors. They refrain from seeking any new fixed deposits without nomination.
The Reserve Bank of India (RBI), as a regulator, proactively released advertisements in print media during IPL 2020, to attract the attention of the public at large and took the opportunity emphasise the need for registering a nomination for ease of claim.
However, in reality, on ample occasions the spirit of RBI’s push does not percolate to banks, their operating workforce and also senior officials. Bankers themselves do not follow the RBI notifications and guidelines and an account holder does not know where to go.
Hassle despite having nominees
RBI, vide its circular/ notification dated June 9, 2005, has dealt with settlement of claims in respect of deceased depositors – Simplification of Procedure. It lays great stress and emphasis on banks that they exercise due care and caution in establishing the identity of the survivor(s)/ nominees and the fact of the death of the account holder, through appropriate documentary evidence. The notification also absolves a bank and ring-fences it from any further litigation from heirs or successors and mentions that the nominee would be receiving the payment from the bank as a trustee of the legal heirs of the deceased depositor. Further, the notification provides flexibility to banks to frame their own operating procedures such that there is least hassle to the registered nominee and the process is smooth.
RBI has addressed scenarios wherein there are no registered nominees and accounts are without a survivor clause, and how banks should deal with such situations. Duly supported by Banking Companies (Nomination) Rules, 1985, a time limit of 15 days is stipulated for settling the claims in respect of deceased depositors and release of payments to survivor(s) / nominee(s).
Despite such ease of settlement being allowed, banks continue to be irresponsible and lack empathy towards bereaved families and nominees.
The timing of the death claim application is very crucial. If it is close to a quarter ending, banks will ensure that payment is made after the closure of the quarter. Banks misguide the bereaved family and involve them in bureaucratic delays. First, trying to reconcile information with the system, then updating the same after seeking updates on the registered nominees, asking them to visit personally and then indulging in a process guided by authority. Now, if the registered nominee is bereaved, sick, or a senior citizen, how banks behave is entirely a matter of speculation. There are no guidelines or SOPs that operating officials need to follow; it’s purely an individual driven exercise.
An example of harassment
This is a true incident. A widowed daughter was a registered nominee in her father’s (deceased) savings account and FDs. The father had registered her name when she was unmarried. Now her self-attested KYC (Aadhaar card) address mentioned her post-marriage name and address of her marital home; details on her pan card mentioned her father’s name. She was asked to provide proof of old address. This demand from the bank seemed unrealistic, irrelevant and unfeasible. The nominee had to meet Zonal Office officials and then other influencers who submitted legal representations on her behalf before she could get the legitimate due. This took her time and, during bereavement, this was additional stress.
A deceased father had three daughters, all married. His bank accounts and FDs had registered nominees. The father died in a city where one of the three daughters stayed. Upon his demise, each of the daughters approached the bank with death claim forms, with notorised death certificate, self-attested KYC, cancelled cheque of the bank where they had their respective bank accounts, bank attested and bank certified (as per IBA’s approved format) details with the photo of the daughters. While the FDs were in his sole name, the bank said that as per their system, the FDs were in joint names and were not ready to accept the FD receipts that had only the sole name printed on the receipt.
Additionally, the bank raised the following issues: death certificate must have the permanent address of the deceased, the same as that of his permanent address (as registered with the bank). Additionally, the bank refused to accept the claim unless all the nominees came personally to the home branch. With one of the daughters being overseas and despite all compliances being met, her NRO bank account was not credited till she would come personally to the branch. This enabled the branch to extend the release of fund for 48 days, take and it beyond the quarter end. The bank’s objective was met.(The writer is Founder & Initiator-Inheritance Needs Services)