Banks told to settle deceased depositor claims in 15 days

The Reserve Bank of India (RBI) today directed banks to settle claims and release the payments to the 'survivor' of a deceased depositor within 15 days from the date of receipt of the claim on production of proof of death of the depositor and suitable and satisfactory identification of the claimant.

The regulator has also warned banks that any unwarranted inconvenience or hardships to such claimants would invite serious supervisory disapproval.

In the case of term deposits of the deceased depositors, the RBI has asked banks to allow premature termination without any penal charge in the event of the death of the term deposit holder. It has asked banks to incorporate such a clause in the term deposit account opening form itself.

To ensure accountability the central bank has asked banks to report, at regular intervals, the number of claims received pertaining to the deceased depositors and locker-hirer accounts and pending beyond 15 days to their Customer Service Committee of their boards along with the reasons for which they are pending, said the RBI in a notification.

In addition to this the regulator has urged the Indian Banks' Association to formulate, on the basis of RBI instructions, a model operational procedure for settlement of claims of the deceased constituents under various instances for adoption by banks.

Further banks have been also asked to publicise and guide the deposit account holders about the benefits of nomination facility and survivorship clause.

It has also asked the banks to follow a simple procedure with minimum documentation for release of the balance in deceased account holders' accounts which operate under 'Either or Survivor' clause or in accounts which have a nomination.

For accounts which do not have 'Either or Survivor' clause nor have a nomination, the central bank has directed banks to fix a minimum threshold limit up to which they could release the balance amount lying in the deceased account holders' account after obtaining a letter of indemnity and without insisting upon production of any other documents.