Summary of this article
RBI to standardise claim process across all banks
Valid nominations mean no legal documents are needed
Claims must be settled within 15 days of request
The Reserve Bank of India (RBI) announced in its August 6, 2025, policy statement that banks will streamline the procedure for settling claims regarding deposit accounts, safe custody items, and locker contents in the event of a customer's death. The aim is to reduce imbalance across banks and streamline the process.
While current guidelines mandate banks to adopt a streamlined and straightforward procedure for such claims, the method varies extensively from one bank to another. RBI will, therefore, release a draft circular for public consultation that specifies a standard procedure and checklist of documents applicable to all banks.
Nomination And Survivorship Clauses Form The Basis
According to the Banking Regulation Act, 1949, all banks must provide nomination facilities and survivorship provisions in deposit accounts, safe custody services, and lockers. These provisions allow for the immediate settlement of claims without the submission of legal documents such as succession certificates, as long as the claimant's identity and the customer's death are established.
RBI has reaffirmed that where there are valid nominations or survivorship clauses, the banks should not demand additional legal documents or indemnity bonds. These instructions were a part of previous circulars that were released during 2000, 2001, and 2005, based on the suggestions of the Committee on Procedure and Performance Audit on Public Services (CPPAPS).
Time Limits And Flexibility For Accounts Without Survivor/Nominee
Banks have been directed to settle claims within 15 days of the request, given the production of death certificate and valid identity of claimant. Banks can apply a simplified procedures for low-balance accounts without a nominee or survivorship clause. Banks can settle such claims on a letter of indemnity from legal heirs, without demanding formal legal documents.
For term deposits, the RBI has directed banks to allow premature withdrawal without penalty in the event of the account holder's death, if this clause is included at the time of account opening.
Handling Future Credits And Recurring Payments
Banks are also required to devise a definite procedure to handle pipeline flows, like salaries, pensions, or other credits, made in the name of an expired account holder. Two choices are allowed: either depositing such flows into an "Estate of the Deceased" account opened with the consent of the nominee (without facilitating withdrawals), or refunding the amount to the payer with the remark "Account holder deceased."
Access To Lockers And Safe Custody Items
Where lockers or safe custody items are jointly held or have valid nominations, the RBI has directed banks to follow an identical simplified procedure as in deposit accounts. Banks will have to identify the claimant and ensure there is no court order prior to granting access.
Banks To Update Procedures And Inform Customers
RBI has requested banks to examine their internal guidelines and implement streamlined processes for settling claims, with approval by their boards.
Banks are to make public announcements clarifying the advantages of making nominations and applying for survivorship clauses. Customers must be clearly told; otherwise, claim settlement might involve legal documentation.
The draft circular explaining the standardised process is expected to be released shortly. Once finalised, it will apply uniformly to all banks and is aimed at enhancing customer service standards.
