Settlement of Claim in Banks

Settlement of Claim in Bank

  What is a settlement of claim?

Settlement of claim refers to payment/release of a deceased/dissolved customer’s money’s assets etc., remaining with the bank or allowing access to the lockers standing in his/her name to the rightful claimants (nominees, legal heirs, successors) of the deceased in accordance with law in such a manner that Bank’s interests remain protected in the event of any future adverse action.

 

The fundamental objective of settling the claim is to ensure that only the rightful claimants get the moneys etc., or access to lockers belonging to the deceased individual in accordance with the law. A person may succeed to the deposits/assets of a deceased account holder/depositor/borrower/locker holder either on the basis of testamentary succession (i.e., on the basis of Will) or intestate succession (i.e., dying without executing any Will).  In either case, the claim application is required to be submitted by all the claimants.


Procedure for settlement of claim

 

When a person approaches the bank for preferring a claim on testamentary/intestate basis, the Bank will call for the records pertaining to the accounts/assets/articles/securities of the deceased lying with the Bank and verify as to whether:

a)      Deposit account/safe custody receipt/safe deposit locker stands in joint names of deceased and claimant/s with survivorship clause in favour of the claimant/s.

b)      Nomination has been made and registered in respect of the deposit account/safe custody receipt/safe deposit locker in favour of the claimant

 

In case the deposit account/safe custody receipt/safe deposit locker is in a single name of the deceased only, or in joint names of the deceased and others without survivorship clause, or without nomination registered in respect thereof, then the documents mentioned below are required to be submitted by the claimant/s:

 

a. Claim application in the bank’s format

b. Death certificate issued by a competent authority

c. Declaration in the Bank’s format as to the legal heirs and the religion of the deceased given  by a customer/person well known to the Bank and who is good for the value of the claim.

Succession certificate, if any, obtained from a competent court/authority authorizing the claimant/s to receive the debts.

d. Affidavit in the Bank’s format from any one of the attesting witnesses to the Will in case the deceased has left behind a Will.

e. Will, where the claim is based on the will of the deceased which is not probated

                                   or

     Will with its Probate issued by a competent court, where the Will is probated.

f.  Letters of administration, where an administrator is appointed by a competent court

g. Letter of authority (preferably attested by a Notary Public) in Bank’s format from the duly   identified legal heirs authorizing any one or several of them to receive the amount/securities under the claim form the bank.

h. Indemnity agreement

i.  Stamped receipt/discharge/acknowledgement



Steps involved in settlement of claim

  Accounts with nomination clause:

* Application for deceased claim from nominee/guardian of nominee

* Copy of death certificate (verified with the original)

* Identity proof.

Joint Account with either or survivor Clause:


* Application for deceased claim from survivor

* Copy of death certificate (verified with the original)



 For cases other than nomination/joint accounts with survivorship clause (upto  
      Threshold limit:


* Application for deceased claim

* Copy of death certificate (verified with the original)

* Letter of Indemnity signed by claimant

* Receipt from legal heirs

 

 Time norms for settlement of claims

In the case of accounts with survivor/nominee clause, claims have to be settled within a period not exceeding 15 days from the date of receipt of claim papers.

 In all other cases (without survivor/nominee clause), the claim should be settled within  One month from the date of receipt of claim application along with requisite documents.

 

 Payment of interest in case of term deposits of deceased depositors

 

On the maturity of deposit, interest shall be paid at the contracted rate.


In the case of premature withdrawal, the bank will pay interest at the applicable rate for the period for which the deposit has remained with the Bank without charging penalty.


In case of deposit being claimed after the date of maturity, interest should be paid at the Rate of  2% above the Savings Bank rate from the date of maturity till the date of payment in such cases.


 Credits to deceased customer’s account

 

As per the instructions in force, an account styled “Deceased Estate of Shri………………the deceased” where pipeline flows would be credited provided no withdrawals are made. The balance lying in such accounts may be paid by following the procedure for Settlement of Claims referred above.


Policy on Settlement of Claims in respect of deposits of missing persons:

 

Based on the provisions relating to settlement of claims in respect of deposits of deceased persons put in place by the Bank, policy on settlement of claims in respect of the deposits of missing persons has been approved by the Board. The guidelines of the policy on settlement of Claims in respect of Missing Persons are given below:

a) If the depositor has registered nomination with the Bank, the balance outstanding in the

account of the missing depositor will be transferred to the account of / paid to the nominee after the bank is satisfied about the identity of the nominee.

b) The above procedure will be followed even in respect of a joint account where nomination is registered with the bank.

d) In a joint deposit account, when one of the joint account holders dies, the bank is required to make payment jointly to the legal heirs of the missing depositor and the surviving depositor(s), in the absence of a mandate. However, if the joint account holders had given mandate for disposal of the balance in the account in the forms such as either or survivor, former / later or survivor, anyone of survivors or survivor, the payment will be made as per the mandate.

e) In the absence of nomination and when there are no disputes among the claimants, the bank will pay the amount outstanding in the account of missing depositor to the claimants following the prescribed procedure. To ensure that the depositors are not put to hardship on account of delays in settlement of claims, certain powers have been delegated to different authorities in the Bank.

Interest Payable on term deposit of Missing Depositors:

a) On maturity of the deposit, interest shall be paid at the contracted rate.

b) In the case of premature withdrawal, the Bank will pay interest at the applicable rate for the period for which the deposit has remained with the Bank without charging penalty.

c) In case of deposit being claimed after the date of maturity, interest should be paid at the rate 2 per centage points above the Savings Bank rate from the date of maturity till the date of payment in such cases.

Threshold Limit:

The Reserve Bank of India has advised the Banks to fix a threshold limit up to which claims in respect of missing persons could be settled without insisting on production of any documentation other than [i] FIR and non-traceable report issued by police authorities and [ii] Letter of Indemnity keeping in view the imperative need to avoid inconvenience and undue hardship to the common person. Accordingly, Bank has fixed a threshold limit of Rs.0.50 lakhs for settlement of claims in respect of missing persons under the simplified procedure for settlement of claims.

Simplified procedure for settlement of claims in respect of missing persons – documents
to be obtained [up to threshold limit]:

Under the simplified procedure recommended by the RBI for settlement of claims in respect

of missing persons where the amount involved is within the threshold limit prescribed as prescribed above, the claim could be settled without insisting on production of any documentation other than [I] FIR and Non-Traceable Report issued by Police Authorities and [ii] Letter of Indemnity.

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