The Hindu Business Line : Banks told to simplify claims on death of depositors

THE Reserve Bank of India has directed banks to simplify the procedure to facilitate speedy and easy settlement of claims following the death of depositors.

The apex bank has also told the Indian Banks' Association to formulate a model operational procedure for the settlement of such claims.

According to an RBI notification, the banks have to release the balance amounts in the deceased depositor's account(s) to the `Survivor' named in the `Either or Survivor' clause, or the `Nominee' without insisting on succession certificate, letter of administration, probate, or obtaining any bond of indemnity or surety from the survivors or nominee, irrespective of the amount.

For accounts that do not have the `Either or Survivor' clause or a nomination, banks must set a minimum limit up to which they can release the balance amount, after obtaining a letter of indemnity and without insisting on other documents.

In the case of term deposits, banks may allow premature termination without any penal charge in the event of the depositor's death.

Banks must include such a clause in the term deposit account opening form itself, the notification said.

For any income such as interest or dividend warrants that may continue to be credited to the deceased depositor's account, the RBI has suggested that banks open an alternative account in which all payments can be credited, provided no withdrawals are made from the account.

The RBI notification also said that banks have to settle the claims and release the payments of the deceased depositor's account(s) within 15 days of receiving the claim and on production of proof of death of the depositor and satisfactory identification of the claimant.

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