MUMBAI: The Reserve Bank has issued revised norms mandating banks to settle claims on a deceased customer’s account and lockers within 15 days, ordering compensation for delays. Simplified and streamlined procedures apply for bank accounts without a nominee, with less than or up to Rs 15 lakh deposits and Rs 5 lakh for co-op banks, while higher amounts may require additional documents.
The development comes even as the amount of unclaimed money lying in bank accounts has risen to a whopping Rs 1 trillion, growing into a political talking point at higher levels. This had finance minister Nirmala Sitharaman asking the heads of public sector banks to resolve the issues on a war footing.
Over the weekend, the Reserve Bank issued the revised norms for the settlement of claims on deceased customers' bank accounts and lockers within a 15-day timeframe and prescribed compensation to the nominees for delays.
In cases where the account is without a nominee/survivorship clause, banks have been asked to adopt a simplified procedure for settlement of claims if the aggregate amount payable is less than the threshold limit of Rs 15 lakh.
All the person seeking the money needs to produce is the death certificate and the id proof of both the deceased as well as self. If the amount being claimed is more than the threshold, then more documentation will have to be done, depending on each bank’s norms.
For a deposit account where a depositor had made a nomination or where the account was opened with a survivorship clause, the payment of the outstanding balance upon the death of the depositor to the nominee/survivor shall be considered a valid discharge of a bank's liability, the RBI said.
On the time line for settlement of claims, the RBI said a bank shall settle a claim in respect of deposit accounts of a deceased customer within a period not exceeding 15 calendar days from the date of receipt of all the required documents associated with the claim.
"In case of safe deposit lockers/ articles in safe custody, the bank shall, within 15 calendar days of receipt of all the required documents, process the claim and communicate with the claimant for fixing the date for making inventory of the locker/articles in safe custody," the central bank said.
Further, in cases of delay attributable to the bank, compensation shall be paid by the bank in the form of “interest, at a rate not less than the prevailing bank rate plus 4% per annum, on the settlement amount due for the period of delay," it said.
For claims related to safe deposit locker/ articles in safe custody, the bank will be required to pay compensation to the claimant at the rate of Rs 5,000 for each day of delay, in cases where it doesn't adhere to the timeline.
The revised instructions are aimed at streamlining the divergent practices followed by banks in the settlement of claims in respect of deceased customers. It has also standardised the documentation to bring improvement in the quality of customer service.
The RBI said the implementation of the revised settlement of claims in respect of deceased customers will be carried out as expeditiously as possible, but not later than March 31, 2026.
The directions are related to the settlement of claims in the deposit accounts of a deceased customer, safe deposit locker and articles in safe custody by the deceased customer.
Threshold limit means Rs 5 lakh in case of a co-operative bank and Rs 15 lakh in case of any other bank or such higher limit as may be fixed by the bank, including a co-operative bank.
In cases where the amount is above the threshold limit, the bank may ask for additional documents like a succession certificate or a legal heir certificate.
The RBI's latest directions also prescribe norms for the settlement of claims not falling under the simplified procedure.
It also details norms to be followed for the settlement of claims in a safe deposit locker and articles in safe custody by a deceased customer.