Settlement of Claims - Deceased Depositors

Settlement of claims - Deceased Depositors- applicable for amount more than threshold limits ( i.e. more than  Rs.2 lacs )

Access to balance in deposit accounts

(A)   Accounts with survivor / nominee clause

In the case of deposit accounts where the depositor had utilized the nomination facility and made a valid nomination or where the account was opened with the survivorship clause ("either or survivor", or "anyone or survivor", or "former or survivor" or "latter or survivor"), the payment of the balance in the deposit account to the survivor(s) / nominee of a deceased deposit account holder represents a valid discharge of the bank's liability provided :

• The identity of the survivor(s) / nominee is well established and the fact of death of the account holder, through appropriate documentary evidence is produced;
• There is no order from the competent court restraining the bank from making the payment from the account of the deceased; and
• It has been made clear to the survivor(s) / nominee that he would be receiving the payment from the bank as a trustee of the legal heirs of the deceased depositor, i.e., such payment to him shall not affect the right or claim which any person may have against the survivor(s) / nominee to whom the payment is made.

Since payment made to the survivor(s) / nominee, subject to the foregoing conditions, it would constitute a full discharge of the bank's liability, insistence on production of legal representation is superfluous and unwarranted. In such case, therefore, while making payment to the survivor(s) / nominee of the deceased depositor, the bank will not insist for production of succession certificate, letter of administration or probate, etc., or obtain any bond of indemnity or surety from the survivor(s)/nominee, irrespective of the amount standing to the credit of the deceased account holder.

(B) Accounts without the Survivor / Nominee clause

For deposit accounts with operating instruction singly, jointly,  joint account with mandate “either or survivor”/”Former or Survivor”/ “Any one or Survivor”/ with or without Nomination process is given at  Chapter-1

2. General Guidelines :

Payment against Legal Representation:

• In regard to payment of balances in the accounts of deceased customers to survivors/ claimants, the branches may call for succession certificates from legal heirs of deceased depositors in cases where there are disputes and all legal heirs do not join in indemnifying the bank or in certain other exceptional cases where the branch has a reasonable doubt, about the genuineness of the claimant/s being the only legal heir/s of the depositor.
• When all the heirs are ready to sign claim form and indemnity bond, branch may not insist for succession certificate.
• The above guidelines are also applicable in respect of other assets like articles kept in the Banks, securities held against advances after adjustment thereof, if any, etc. of the deceased customers to legal survivors / claimants.

Premature termination of term deposit accounts

As given at part-2 (2.4)

Treatment of flows in the name of the deceased depositor

As given at part-2 (para- 2.5)

Time limit for settlement of claims

As given at part-2 ( Para 2.2)

Access to the safe deposit lockers / safe custody articles

For dealing with the requests from the nominee(s) of the deceased locker-hirer / depositors of the safe-custody articles (where such a nomination had been made) or by the survivor(s) of the deceased (where the locker / safe custody article was accessible under the survivorship clause), for access to the contents of the locker / safe custody article on the death of a locker hirer / depositor of the article, the bank will adopt generally the foregoing approach, mutatis mutandis, as indicated for the deposit accounts.

4. Check List of formalities to be completed for Deceased Claims:

Deposits

Payment of balance in the account of the deceased accountholder:

Payment of balances at the credit of deposit account/s of deceased person/s in case of single account or in case of death of all joint accountholders in case of joint accounts, may be made to their legal heirs/nominee on the basis of –

• I. Nomination
• II. without Nomination
• (A) Against Indemnity letter / Bond
• (B) Legal representation

I. Nomination:

(i) Where a depositor dies or, in case of a joint account, all depositors die, the nominee or the person appointed by the depositor(s) to receive the payment on behalf of the minor nominee, should make an application for repayment of the deposit amount in the Bank's Form No.352, duly filled in, along with a copy of the death certificate, duly certified by,

• a Magistrate or Judicial Official OR
• an Officer of the Central or State Government OR
• an Officer of a bank OR
• two persons acceptable to the bank.
• Proof of identification of nominee (s) such as Election / Pan card, Passport, Aadhaar letter etc.
•  Stamped receipt for amount received signed by nominee / person on behalf of minor nominee

II. without Nomination I without Survivor clause

A. Against Indemnity

Documents required:

Copy of Death Certificate

• Photograph & KYC of (a)all claimant(s)/legal heirs, (b)Person furnishing  Affidavit & (c) Surety(ies).
• Letter of Disclaimer(Duly stamped & Notarised)Annexure-A, Letter of Indemnity (Duly stamped) Annexure-C
• Receipt from claimants (payment made by issuing a Banker’s Cheque)
• Affidavit (Duly stamped & Notarised)- Annexure-
• Opinion Report of Surety(ies) -Annexure-D
• Application form –(Form No.33 revised)

Stamped receipt signed by claimant /s for amount received.

(*stamp duty as applicable from time to time in the state of execution as per state enactment) by all the claimants and sureties.

B. Against Legal Representation

Additional  Documents required

• Legal representation i.e. succession certificate or letter of administration or probate of Will granted by competent court.
• Stamped receipt for amount received.

Copy of all documents should be submitted with original for verification by branch official and all documents should be signed in presence of branch official.

Additional guidelines  for Non-Resident Depositor/claimant

In addition to guidelines given for settlement of claim upto threshold limit and above threshold limit following additional guidelines are given for convenience of Non Resident customers.

For Non-Resident Depositor/Claimant

In case the Depositor is Non-Resident, and has passed away abroad, the death certificate which is attested /certified by any of the following shall be accepted for processing the claim:

• Notary Public in that country.
• Indian Embassy / High Commission in that country.
• Bank’s Foreign Office. (wherever it is possible/permissible to do attestation as per local regulations)
• Embassy/High Commission of that Country in India.

A death certificate accompanied by any of the following document as a corroboratory evidence, confirming incidence of death shall be accepted as such:

• Evidence of settlement of an insurance claim at foreign centre on account of death of the account holder.
• Evidence of settlement of proceeds of bank accounts at foreign centre on    account of death of the account   holder.
• Evidence of settlement of terminal benefits by the employer at foreign centre on account of death of the account holder. However, the employer would have to be a government/multilateral Organisation only.
• Evidence of death as provided by a hospital or local police authorities at the foreign centre. However, it may be ensured that any of these documents are issued from the same country as the death certificate.

In case Claimants(NRIs or Foreign Nationals) stay abroad and it is not possible for them to come to India for completion of formalities-

• Execute the documents abroad in the presence of officials of Bank’s foreign offices
• Execute the documents in the presence of Indian Embassy officials. The said document shall be submitted to the Stamp authorities for payment of stamp duty after it reaches India.
• The claimant can appoint his attorney for obtaining proper legal representation and obtain payment against affidavit, indemnity, surety etc. The procedure for the same is that the claimant should execute valid Power of Attorney (POA) which is attested by the Indian Embassy officials.

The assets of deceased NRI account holder should be settled to the legal heirs as per the Personal Law of succession (Hindu, Muslim, Christian or any other community) applicable to the depositor. This is irrespective of whether the claimants happen to be a resident Indian, NRI, PIO or a foreign national.

(However, if any court order/legal representation is obtained, the proceeds should be settled as ordered by   Court. In the case of a foreign court order, ancillary orders/resealing should be obtained from Indian Court u/s     228 of the Indian Succession Act.)

Foreign nationals cannot be accepted as sureties while obtaining Letter of Indemnity as he / she will not be governed by Indian law.

• In case of legal representation-
• Will probated by Indian Court- Same as in resident case.
• Will probated by Foreign Court- properly authenticated copy of the will issued by Foreign Court is to be produced in the Courts of India who can then grant Letters of Administration.
• Succession Certificate / Certificate of inheritance / Letter of Administration by Indian Court- No  additional due diligence except for KYC/proper identification of beneficiaries
• Succession Certificate/ Certificate of inheritance / Letter of Administration by Foreign Court –
• If issued by a Superior Court of a Reciprocating Territory(as notified by Central Govt in Official  Gazette) Claimants to obtain a grant from competent District Court in India for executing the certificate.
• In case, where such certificate is not issued by a Superior Court of Reciprocating Territory, Claimant may be advised to file an application before appropriate District Court in India for issuing a separate Certificate (afresh) by producing the Certificate issued by the Foreign Court.
• If Succession Certificate does not mention the Bank account for which claim is being made- It will be treated as claim without legal representation and to be acted upon accordingly.

Settlement of Claims in respect of Missing Persons Upto Threshold limit and above threshold limit.

Legal Position

The settlement of claims in respect of missing persons would be governed by the provisions of Section 107/108 of the Indian Evidence Act, 1872. Section 107 deals with presumption of continuance and section 108 deals with presumption of death. As per the provisions of Section 108 of the said Act, presumption of death can be raised only after a lapse of seven years from the date of his/her being reported missing. As such, nominee/legal heirs have to raise an express presumption of death of the subscriber under Section 107/108 of the Indian Evidence Act before a competent court.  If the court presumes that he/she is dead, then the claim in respect of a missing person can be settled as is done for any other deceased accounts.

4.2. Settlement of claims within threshold limits (Upto Rs.2 lacs)

Settlement of claims where a person is missing for the last 7 years and more where declaration/certificate from court is not produced

• In cases where the credit balance in the account of a missing person is not large, the claimants may find it expensive and cumbersome to obtain order from the court. In order to avoid hardship and cost involved to the claimants in approaching the court for settling small claims in respect of missing persons, the RBI advised banks to put a threshold limit for settlement of claims without insisting for submission of declaration/certificate from the court. The bank has fixed threshold limit of Rs.2 lacs for this purpose.

The Bank (in such cases) shall settle the claims on production of the following documents:

• FIR with the Police
• Final /Non traceable Report issued by  police authority stating that the persons is not traceable.
• Letter of indemnity along with two sureties acceptable to the bank for the value of the amount released. ( as per format given in chapter 2 part-II)

In settling the claims on the basis of FIR and Final Report the following points should be taken care of.

• FIR should have been lodged with the police and the police should have put up  the Final Report stating that the person is non-traceable that the individual has not been traced after all efforts have been made by the police.
• FIR should have been filed only by those persons who would naturally have heard of him;
• FIR should be lodged with the concerned police station at a place where the  person was found to be missing or in his permanent residence or at a place he was residing for the last one year;
• The date of disappearance of the person will be reckoned from the date of First Information Report with the police.

Apart from above, the following are also required to be considered:

• The credit balance in the account including accrued interest up to the date of submission of application for settlement of claim submitted to the branch to be considered for arriving at threshold limit of Rs.2 lacs. However, interest up to the date of settlement of claim is to be given to the claimant. In case, the balance amount together with interest on the date of submission of application comes more than Rs.2 lacs then the claimant has to produce declaration/certificate from the competent court for settlement of the claim.

Settlement of Claims in respect of Missing person (Above threshold limits at present Rs.2 lacs)

• Settlement of claims where a person is missing for the last 7 years & more and where order from competent court is produced

In a situation where an individual has been missing for 7 years or more and if the nominee / legal heirs/ produce the declaration of the Court that such an individual is presumed to be dead (civil death) then, such person’s account may be treated  as of the account of a deceased person.  In such cases, when a declaration as aforesaid is furnished, the same will tantamount to the death certificate and it would be in order for the Bank to proceed on such declaration to settle the claims in respect of such missing person’s accounts. 

The Credit balance in the deposit account up to any extent may be settled on the basis of submission of claim by the nominee/legal heirs/ enclosing Whether order or Certificate/declaration, Of the competent court and on the basis of identification of the nominee / legal heirs/ claimants the credit balance together with interest, if any, may be paid by cheque or to their account maintained with us or through NEFT/RTGS if account maintained with the other bank.

The branch official should visit the residential premises of the account holder and make discreet enquiries about him/her and report to be kept on  branch record. The matter should be reported to next higher authority for PSR.8

Bank will settle the claims in respect of deceased depositors and release payment to survivor (s)/ nominee in case of accounts with survivor/ nominee within a period not exceeding 15 days from the date of receipt of the claim subject to the production of proof of death of the depositor and suitable identification of the claimant(s) to the bank’s satisfaction. In the case of accounts without survivor/ nominee clause the claim should be settled within 1 month from the date on which all the requisite documents have been submitted.

Information on Settlement of claims in various types of accounts/facilities

With Nomination

Without Nomination

Annexure-1 Advantages of Nomination facility/survivorship mandate and Clarifications regarding Provisions in Nomination Rules and Discretionary Administrative Powers for settlement of claim.

Guidance to the customers on advantages of Nomination facility/survivorship mandate

Nomination facility

• Nomination Facility – an ideal tool to mitigate hardships of common persons in settlement of claims in the event of death of the account holder.
• Nomination facility simplifies the procedure for settlement of claims of deceased depositors as bank gets a valid discharge by making payment of the balance outstanding in a depositor's account at the time of his death or delivering contents of locker or articles kept in safe custody to the nominee.
• Nomination is optional for bank customers. It is therefore necessary that nomination facility is popularized and customers are made aware of its advantages while opening a deposit account or opting for the lockers.
• Branch should inform account holder about the availability of nomination as a voluntary facility and recommend his/her availing the option.  Nomination facility,  if  availed,  would  ensure  smooth settlement of claim to the nominee.
• It should also be made clear to the depositor(s) that nomination is introduced solely for the purpose of simplifying the procedure for settlement of claims of deceased depositors and nomination facility does not take away the rights of legal heirs on the estate of the deceased. The nominee would be receiving the stock from the bank as a trustee of the legal heirs

Survivorship

• A  joint  account  opened  as  Either  or  Survivor  or     Anyone  or Survivors or Former or Survivor or Latter or Survivor will permit the  surviving  account  holder(s) to  have unimpeded  access  to  the credit balance in the account for withdrawal if one of the co-account holders dies.
• If the mandate of survivorship is given / provided, the survivor(s) can give a valid discharge to the bank in the case of Either or SurvivorAnyone or Survivors and Former or Survivor / Latter or Survivor joint accounts.
• In short, payment to survivor(s) can be made in the normal course subject to the only rider that there is no order from a competent court restraining the bank from making such payment.

Customer Guidance and Publicity

This Operational guidelines for settlement of claims of deceased depositors has been formulated with a view to removing hardships faced by common persons in settlement of claims in deceased accounts. This document also aims at creating greater awareness amongst depositors about the advantages of availing nomination facility offered by bank or giving operational mandates like Either or Survivor, etc. when accounts are opened in joint names.

Branch may provide guidance to deposit account holders on the advantages of the nomination facility and the survivorship clause. It should be highlighted in the publicity material that in the event of the death of one of the joint account holders, the right to the deposit proceeds does not automatically devolve on the surviving joint deposit account holder/s, unless there is a survivorship clause.

The  Banking  Companies  (Nomination)  Rules  1985  have  been  framed  in terms of Sections 45 ZA to 45 ZF of the Banking Regulation Act, 1949.

Deposit Accounts

• Nomination facility is intended only for individuals including a sole proprietary concern.
• There  cannot  be  more  than  one  nominee  in  respect  of  single/joint deposit account.
• Bank may allow variation/cancellation of a subsisting nomination by all the surviving depositor(s) acting together. This is also applicable to deposits having operating instructions “Either of Survivor”.
• It may be noted that in the case of a joint deposit account the nominee’s right arises only after the death of all the depositors.

Safe Deposit Lockers

• Nomination facility is available in respect of lockers hired singly as well as jointly. In respect of lockers in joint names nomination rules are applicable only if lockers are operated jointly.
• Where the lockers are hired jointly, on the death of any of the joint hirers, the contents of the locker are allowed to be removed only jointly by the nominee(s) and the survivor(s) after an inventory is taken in the prescribed manner. In such a case, after such removal preceded by an inventory, the nominee and surviving hirer(s) may still keep the entire contents with the same bank, if they so desire, by entering into a fresh contract of hiring a locker.
• Banks are not required to open sealed/closed packets  found  in locker while releasing them to the nominee or nominees and surviving hirers. Description of the sealed/closed packet(s) should however be mentioned in the inventory.
• Section 45 ZE of the B.R Act, 1949 does not preclude a minor from being a nominee for obtaining delivery of the contents of a locker. The responsibility of the bank in such cases is to ensure that when the contents of a locker are sought to be removed on behalf of the minor nominee, the articles are handed over to a person who, in law, is competent to receive the articles on behalf of the minor.

Safe Custody Articles

• Nomination facility is available only in the case of individual depositor / sole proprietary concern and not in respect of persons jointly depositing articles for safe custody.

Discretionary Administrative Powers for settlement of claims

Powers are given in Chapter-1 Customer Services para 1.1 of Discretionary Administrative Powers for Domestic Operations (Publication No.154- Revised 2018 in respect of payment of balance in the account of the deceased customer to the nominee / legal heirs/ claimants may be exercised by the different authorities.

Annexure-1(a)

Settlement of Claims in Various types of Operational instructions Deposits

With Nomination

Without Nomination

Lockers

With Nomination

Without Nomination

Annexure – 1 (b)

Provisions of Law regarding Legal heirs

Hindu

• If the deceased is a male Hindu, dying in testate, it must be ascertained whether there are one or more Class-I legal heirs.
• The following are called Class-I legal heirs: mother, widow, son, daughter, son of a predeceased son, son/daughter of a predeceased daughter, son or daughter or widow of a predeceased son of a predeceased son, widow of a predeceased son, son / daughter of predeceased daughter of predeceased daughter, daughter of predeceased son of a predeceased daughter, daughter of predeceased daughter of predeceased son also. All Class-I legal heirs take simultaneously to the exclusion of any other legal heir and no one takes precedence over the other.
• The Class-II legal heirs are classified in different Entries and legal heirs belonging to Entry-I will be preferred to the second entry and so on in succession. But there is no preference among these falling in the same entry and they take their share simultaneously
• Entry-I  - Father
• Entry-II - (a) Son's daughter's son, (b) Son's daughter's daughter (c) Daughter's Daughter’s son, (d) Daughter's daughter's daughter (e) brother and sister.
• Entry-III - Son/ daughter of daughter's son and son /daughter of daughter's daughter.
• Entry -IV - Gives son/daughter of brother or sister as the heirs and many more.
• In case, the deceased is a married female Hindu, who died intestate, the following are her legal heirs.  (a) Sons & daughters (including the children of any predeceased son) & the husband; (b) Heirs of husband; (c) Mother & Father, (d) Heirs of father; (e) Heirs of Mother.
• If a female Hindu who dies intestate does not have son/daughter, the property inherited from her parents goes to heirs of father whereas if the same is inherited from husband or parents-in-law, heirs of husband will inherit the property.

Christian

• Where the deceased is a Christian, Indian Succession Act governs the intestate succession.
• As per the provision of this Act, the widow of the male intestate is entitled to one-third of the property while the remaining two-third goes to lineal descendants (i.e. sons & daughters) in equal shares. If he has none, whole property passes to his widow.
• If the male intestate has left no lineal descendant, one half goes to the widow and other half to the kindred (i.e., father, mother, brother, sister).
• In case a Christian female dies intestate, husband has the same right.

Mohammedan

Inheritance in the case of Muslims is governed by the Sunni or shia law depending upon the sect in which they belong to.

According to Sunni law the classes of heirs are
Sharers --- 

Heirs by consanguinity

• Ascendants :  Father, True grandfather, Mother, True grandmother
• Descendents:  Daughter, Son's daughter,
• Collateral : Full/consanguine sister, uterine brother/sister Heirs by affinity - husband, wife

But these 12 sharers will inherit fixed shares subject to conditions. A sharer may be excluded by many reasons such as nearer in blood will exclude remote one in one class. Sometimes sharer may be converted as residuary or otherwise one sharer may be partly sharer and partly residuary.

Residuary category:

After fixed share is allotted to the sharers the residue left is devolving upon the residuary:

Children male or female of deceased, of son of deceased, or father of deceased, male descendents of true grandfather.

Son is always a residuary. Daughter with son becomes residuary. Among these, descendents exclude all others. Ascendants exclude all others except descendents and descendents of nearer ascendants exclude those in remote. In each class of residuary nearer blood excludes remote one. Division among these is according to the rule of double share to the male and if only one sex is there then equally divided.

In the absence of sharers and residuary estate devolves upon his other blood relations i.e., distant kindred

According to Shia law the heirs are

Heirs by consanguinity

• (i) Parents (ii) Children & descendents
• (i)  Grand parents (true/false) (ii) Brother or sister and descendents
• Paternal or maternal uncle of him or his parents and grandparents

Heirs by Marriage  :    Husband, wife

Heirs  by  consanguinity  and  heirs  by  affinity  succeed  simultaneously. Among heirs by consanguinity those in class I exclude those in class II. The heirs in two sections of class I succeeds together. In each section nearer in degree exclude the remote. The son always takes as a residuary.

A certificate from Muslim Jama-I-eth in the letterhead signed by the head of the institution to which the deceased was affiliated should be obtained giving details of legal heirs with their age. In case of male deceased, a categorical certificate to the effect that the deceased had not married any woman other than the one named in the list is to be insisted upon.

Minor's Interest and Guardianship

• Where  the legal heir is  a minor,  his lawful  guardian  will  represent his interest.
• For Hindus and Christians, minor's father is the natural guardian and after him the mother. Regarding the guardianship of a minor (Hindu) it has been decided by the Supreme Court that even mother can be a natural guardian even during the life time of father since the welfare of child is of utmost importance.
• For a minor, who is a Muslim, father, then person appointed by father's will, then father's father and then person appointed by father's father will be guardian in order.

A list of legal heirs under various personal laws is as under:

Legal heirs under various personal laws (summary)

Hindus

• Primary heirs of a Hindu male are:
  1. Son(s)
  2. Daughter(s)
  3. Wife
  4. Mother
  5. Children of Predeceased children
  6. Widow of predeceased son
  7. Children of predeceased grand children
• Primary heir(s) of a Hindu female are:
  1. Son(s)
  2. Daughter(s)
  3. Husband
  4. Children of predeceased children

Muslims

• Primary heirs of a Sunni Muslim are:
  1. Son(s)
  2. Daughter(s)
  3. Father
  4. Mother
  5. Spouse (Husband/Wife)
• Primary heirs of a Shia Muslim are:
  1. Spouse (Husband/Wife)
  2. Mother
  3. Father
  4. Son(s)
  5. Daughter(s)

Christians

• Primary heirs of a Christian are:
  1. Spouse (Husband/Wife)
  2. Son(s)
  3. Daughter(s)

Parsis

• Primary heirs of a Parsi male are:
  1. Wife (Widow)
  2. Son(s)
  3. Daughter(s)
  4. Mother
  5. Father
  6. Children of predeceased children

• Primary heirs of a Parsi female are:
  1. Husband
  2. Son(s)
  3. Daughter(s)
  4. Children of predeceased children