RBI’s proposed guidelines: Simplifying settlement of claims for deceased depositors

For accounts without nominees or survivorship clauses, the RBI introduces a simplified procedure to reduce hardship for legal heirs.

The Reserve Bank of India (RBI), under Governor Sanjay Malhotra, on August 6 announced a draft circular aimed at streamlining the process for settling claims related to deceased depositors. This initiative seeks to alleviate the emotional and administrative burden on nominees and legal heirs by standardizing procedures for accessing funds in bank accounts, safe deposit lockers, and items in safe custody.

The proposed guidelines, open for public feedback until August 27, 2025, reflect a customer-centric approach, balancing operational efficiency with empathy for grieving families.

Streamlined process for accounts with nominees

For accounts with a nomination or survivorship clause, the RBI proposes a straightforward process to ensure quick access to funds. Upon the depositor’s death, banks can disburse the outstanding balance to nominees or survivors, provided they verify the identity of the claimant and the deceased’s status using appropriate documentation, such as a death certificate and an officially valid ID. Crucially, banks are not to insist on additional legal documents like succession certificates or bonds of indemnity, regardless of the account balance. This eliminates unnecessary hurdles, ensuring a full discharge of the bank’s liability upon payment.

The guidelines emphasize that nominees act as trustees for the legal heirs, meaning the payment does not prejudice any third-party claims against them. However, this simplified process applies only in the absence of a will or court orders restraining payment, ensuring legal clarity.

Simplified procedures for accounts without nominees

For accounts without nominees or survivorship clauses, the RBI introduces a simplified procedure to reduce hardship for legal heirs. Banks are directed to set a threshold limit (minimum Rs 15 lakh) for claims, based on their risk management systems. For claims up to this limit, banks require a claim form, death certificate, claimant’s ID, a bond of indemnity, and, if applicable, a letter of disclaimer from non-claimant heirs or a legal heir certificate. Notably, third-party indemnity bonds are not required, further easing the process.

For claims exceeding the threshold, additional documentation, such as a succession certificate or a sworn legal heir declaration, is necessary. This tiered approach balances simplicity with the need for legal safeguards in higher-value claims.

Handling complex cases

The draft circular addresses scenarios involving wills or disputes. If a deceased depositor leaves a will without disputes, banks may settle claims based on the will’s authenticity, potentially without requiring probate, provided it aligns with applicable laws. In cases of contesting claims or court orders, settlement requires a probate, succession certificate, or court decree. These provisions ensure that banks handle complex cases with due diligence while minimizing delays.

Safe deposit lockers and safe custody items

For safe deposit lockers and items in safe custody, the RBI proposes similar simplifications. Nominees or survivors can access locker contents upon submitting a claim form, death certificate, and ID, with banks ensuring no court orders restrict access. An inventory of the locker’s contents is prepared in the presence of nominees, independent witnesses, and bank staff, ensuring transparency. For accounts without nominees, legal heirs must provide additional documentation, such as a legal heir certificate or affidavit, but banks are encouraged to avoid insisting on succession certificates unless disputes arise.

Term deposits and joint accounts

For term deposits, the RBI mandates that banks include a clause in account opening forms allowing premature termination without penalties upon the depositor’s death, even during lock-in periods. For joint accounts, premature withdrawal requires consent from surviving account holders and, in some cases, legal heirs, unless a specific mandate is provided.

Global considerations

For deaths abroad, banks can accept authenticated proof-of-death documents, such as those verified by Indian embassies or apostilled, ensuring inclusivity for NRIs.