The Reserve Bank of India’s draft circular released late on Wednesday proposes to significantly ease the claim settlement process following death of an account holder. The proposed guidelines, applicable to all commercial banks and co-operative banks, cover deposit accounts, lockers and articles in safe custody.
The central bank has sought comments on the draft circular by August 27.
Banks must release funds to nominees or surviving account holders without insisting on legal documents like succession certificates or probate, provided there is no will, court order or dispute, the circular said. The nominee must submit a claim form, the death certificate, and a valid identification document.
Mandatory compensation for delayed settlements
If any deposit-related claim is not settled within the timeframe, the bank shall communicate to claimants the reasons behind such delay.
“…In cases of delay attributable to the bank, compensation shall be paid to claimants by the bank in the form of interest, at a rate not less than the prevailing bank rate + 4% per annum, on the settlement amount due for the period of delay,” the circular said.
In cases of delay in processing claims with regard to safe deposit locker or articles in safe custody, the bank shall be required to pay compensation at the rate of Rs 5,000 for each day of delay.
Streamlining non-nominee and joint account claims
Banks must adopt a simplified procedure for settlement of claims in deposit accounts where a deceased depositor had not made any nomination, or in cases of joint accounts without nominee or survivor clause, keeping in view the imperative need to avoid inconvenience and undue hardship to the claimant or the legal heir, the circular said.
For settlement of such claims, a bank, based on its risk management systems, must fix a threshold limit of Rs 15 lakh.
They will also be required to settle claims within 15 days of receiving complete documentation. In case of safe deposit locker/articles in safe custody, the bank shall, within 15 days of receipt of all requisite documents, process the claim and issue communication to the claimant for fixing the date for taking inventory of the locker/articles in safe custody.