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Operational Procedure for Settlement of Claims of Deceased Depositors and Return of Articles in Safe Deposit Lockers/Safe Custody

Sr.No Topics Page No

Chapter-1- Up to threshold limit

 

Part-1

Introduction

2

Part-2

Guidance to the customers on Advantages of nomination facility/survivorship mandate

4

Part-3

Settlement of claims in various types of accounts/facilities

6

Part-4

Settlement of Claims in respect of Missing Persons

13

Part-5

Simplification of the process for settlement of claims in deceased depositor's account

15

Chapter-2-Above threshold limit

21

Part-6 Annexures

 

A-1

6.1 Clarifications regarding provisions in Nomination
Rules
6.2 Discretionary Administrative Powers for sanction of settlement of claims in respect of deceased /missing person

25

26

A-1 (a)

Settlement of claims in various types of accounts/facilities

27

A-2

Check list of Documents

30

A-3

Application for deceased claim (to be used when account has nomination or is a joint account with survivor clause) Form No.352 - revised Form No.352 D

31

A-4

Application for Deceased claim (to be used for cases other than nomination/joint account with survivor clause) Form No.33A upto Thresh hold limits

33

A-5

Affidavit Cum Indemnity Letter

35

A-6

Receipt

37

A-7

Form of Inventory of contents of Safety Locker Hired from Banking Company (With Nomination) Form No.352 SL1

38

A-7 (a)

Form of Inventory of contents of Safety Locker Hired from Banking Company (With out Nomination) Form No.352 SL2

40

A-8

Form of Inventory of articles left in Safe Custody with Banking Company (with nomination) ) Form No.352 SC1

42

A-8 (a)

Form of Inventory of articles left in Safe Custody with Banking Company (with out nomination) Form No.352 SC2

44

A-9

Legal heirs under various personal laws

45

A-10

LETTER OF INDEMNITY - settlement of claim in respect of Missing person

47

 

Part 1 - Introduction

1.1. Delays in settlement of claims by legal heirs of deceased constituents of bank cause considerable hardship to dependent legal heirs.   Claims by legal heirs could be in respect of deposits, safe custody articles or contents of lockers. With a view to removing the hardships faced by Common Person, the RBI Committee on Procedures and Performance Audit on Public Services (CPPAPS) had suggested that the Reserve Bank of India may issue comprehensive guidelines in the matter and IBA may be asked to draft and circulate a comprehensive model operational procedure, which could be used by bank for settlement of claims of deceased depositors and Safe custody articles.

1.2. The legal position is quite clear in the matter of deceased claims. In the absence of nomination or clear mandate in respect of a joint account or a will left behind by the deceased depositor, bank is expected to pay the stock (balance outstanding) at the time of death of the person to all the legal heirs of the deceased. Considering the risk involved, bank traditionally used to look for legal representation (in the form of a succession certificate, letter of administration or probate, etc) for settlement of claims. The system of obtaining operational mandates in joint accounts emerged as a banking practice to overcome difficulties in settlement of claims in deceased accounts. Subsequently, the statutes were amended in 1985 to provide for nomination facility in bank deposits, safe deposit lockers and safe custody articles. However, since nomination facility is optional at the discretion of the depositor, problems and difficulties in settlement of deceased claims persisted.

1.3. The Reserve Bank of India vide its Circular No. DBOD.No.Leg.BC.95 /09.07.005/2004-05 dated 9th June, 2005 had issued detailed guidelines for evolving simplified procedure for settlement of claims in respect of deceased depositors. The CPPAPS had also made recommendations for easy operation of lockers.  Taking into consideration these recommendations RBI had issued detailed guidelines in respect of Safe Deposit Lockers and Safe Custody Articles Emphasizing need for a simplified procedure for settlement of claims in respect of Safe Deposit Locker/ Safe Custody Articles Facility in the event of death of the depositors(s) vide its Circular DBOD.No.Leg.BC.78/09.07.005/2006-07 dated April
17, 2007.


1.4. The RBI vide its Circular DBOD.No.Leg.BC.80/09.07.005/2007-08 dated May
2, 2008 has issued guidelines for claims in respect of missing persons. The circular brings out the position of Law for presumption of death. The banks were advised to settle the claims of legal heirs of a missing person after considering the legal opinion and take into account the facts and circumstances of each case. The procedure to be followed for settlement of claims in respect of missing person is covered in Part IV of procedure.

1.5. In February 2006, IBA had circulated Model Operational Procedure covering settlement of claims in deceased deposit accounts.   This revised Model Operational Procedure incorporates the subsequent RBI guidelines on settlement of claims in safe deposit locker/safe custody articles facility also.  This model operational  procedure  will  be  applicable  to  the  deceased  claims  in  deposit accounts falling within the threshold limit ( bank to determine the threshold limit keeping in view their risk management policy). Deceased claims within the threshold limit will be settled against indemnity by legal heirs of the deceased without any legal representation in the absence of nomination or mandate given by deceased depositor(s).  The drafting committee could not arrive at a similar threshold risk limit for settlement of claims in a deceased safe deposit locker/safe custody article account for settlement without legal representation considering the fact that value of assets remains unknown.  It is expected that bank would evolve a customer friendly approach in such cases as envisaged by the RBI.

Part-2 Guidance to the customers on advantages of nomination facility / survivorship mandate

2.1 Nomination facility

  • Nomination Facility – an ideal tool to mitigate hardships of common persons in settlement of claims in the event of death of the account holder.
  • Nomination facility simplifies the procedure for settlement of claims of deceased depositors as bank gets a valid discharge by making payment of the balance outstanding in a depositor's account at the time of his death or delivering contents of locker or articles kept in safe custody to the nominee.
  • Nomination is optional for bank customers. It is therefore necessary that nomination facility is popularized and customers are made aware of its advantages while opening a deposit account or opting for the lockers.
  • Bank should inform account holder about the availability of nomination as a voluntary facility and recommend his/her availing the option.  Nomination  facility,  if  availed,  would  ensure  smooth settlement of claim to the nominee.
  • It should also be made clear to the depositor(s) that nomination is introduced solely for the purpose of simplifying the procedure for settlement of claims of deceased depositors and nomination facility does not take away the rights of legal heirs on the estate of the deceased. The nominee would be receiving the stock from the bank as a trustee of the legal heirs.

2.2. Survivorship

  • A  joint  account  opened  as  "Either  or  Survivor"  or     "Anyone  or Survivors" or "Former or Survivor" or "Latter or Survivor" will permit the  surviving  account  holder(s) to  have unimpeded  access  to  the
    credit balance in the account for withdrawal if one of the co-account holders dies.
  • >
  • If the mandate of survivorship is given / provided, the survivor(s) can give a valid discharge to the bank in the case of "Either or Survivor" / "Anyone or Survivors" and "Former or Survivor" / "Latter or Survivor" joint accounts.
  • In short, payment to survivor(s) can be made in the normal course subject to the only rider that there is no order from a competent court restraining the bank from making such payment.

2.3. Customer Guidance and Publicity

This Model Operational Procedure (MOP) for settlement of claims of deceased depositors has been suggested with a view to removing hardships faced by common persons in settlement of claims in deceased accounts. This document also   aims   at   creating   greater   awareness   amongst   depositors   about   the advantages of availing "nomination" facility offered by bank or giving operational mandates like "Either or Survivor", etc. when accounts are opened in joint names.

Bank   may   bring   out   pamphlets   and   other   publicity   materials incorporating details of operational procedures for settlement of claims of deceased depositors for distribution amongst depositors.

Bank may give wide publicity and provide guidance to deposit account holders on the advantages of the nomination facility and the survivorship clause. It should be highlighted in the publicity material that in the event of the death of one of the joint account holders, the right to the deposit proceeds does not automatically devolve on the surviving joint deposit account holder/s, unless there is a survivorship clause.

Part 3 – Settlement of claims in various types of accounts /Facilities.

Upto Threshold limit i.e. Rs.2 lacs (two lacs) Outstanding Balance aggregating all accounts, value of contents in locker/articles kept in safe custody  does not exceed Rs.2 lacs

3.1.  Single Account with or without nomination

3.1.1  Savings Account/Current Account

With Nomination :

The balance outstanding will be paid to the nominee on verification of his/her identity (such as Election ID Card, PAN Card, Passport, Aadhaar Letter, etc.) and proof of death of depositor

Without Nomination :

The balance outstanding will be paid to the legal heirs (or any one of them as mandated by all of the legal heirs) on verification of the authority of the legal heirs and proof of death of depositor.

3.1.2. Term Deposit Account

With Nomination :

The balance outstanding will be paid to the nominee on verification of his/her identity (such as Election ID Card, PAN Card, Passport, Aadhaar Letter etc.) and proof of death of depositor on maturity of deposit.

Without Nomination :

The balance outstanding will be paid to the legal heirs (or any one of them as mandated by all the legal heirs) on verification of the authority of the legal heirs and proof of death of depositor on maturity of deposit.

3.1.3. Premature termination of Term Deposit Account

With Nomination:

Premature termination of term deposit account as per terms of contract will be  permitted at the request of the nominee on verification of his/her identity (such as Election ID Card, PAN Card, Passport, Aadhaar Letter etc.) and proof of death of depositor.

Without Nomination:

Premature termination will be permitted on joint request by all legal heirs (or any of them as mandated by all the legal heirs) as per the terms of the contract on verification of the authority of the legal heirs and proof of death of depositor.

3.1.4. Safe Deposit Lockers

With Nomination:

The nominee will be allowed to access the locker and remove the contents on identification (such as Election ID Card, PAN Card, Passport, Aadhaar Letter etc.) and verification of  proof  of  death  of  locker  hirer.    Before  permitting  the  nominee  to  remove contents of the Safe Deposit Locker, the bank would prepare an inventory of the articles in the presence of nominee(s) and two independent witnesses. Form for taking inventory is enclosed as Annexure – 7.

Without Nomination:

Legal heir(s) of the deceased locker hirer or a person mandated by the legal heir(s) will be allowed to access the locker and remove the contents on verification of proof of death of locker hirer. The legal heir(s) will have to produce documents to establish his / their identity. Before permitting legal heir(s) to remove contents of the Safe Deposit Locker the bank would prepare an inventory of the articles in the presence of legal heir(s)/mandate holder and two independent witnesses. Form for taking inventory is enclosed as Annexure - 7(a).

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