The Reserve Bank of India (RBI) has taken a significant step towards enhancing customer service and minimizing the hardships faced by families of deceased bank customers. With the introduction of the Reserve Bank of India (Settlement of Claims in respect of Deceased Customers of Banks) Directions, 2025, the RBI aims to standardize and simplify the procedures for settling claims related to deposit accounts, safe deposit lockers, and articles in safe custody.
The Need for Standardization
The nomination facility in deposit accounts is designed to facilitate the expeditious settlement of claims upon the death of a customer. However, divergent practices among banks have led to confusion and delays in the settlement process. The new directions seek to address these inconsistencies by providing a harmonized framework that standardizes documentation and procedures, ultimately improving the quality of customer service.
Key Features of the Directions
Applicability and Effective Date
These directions apply to all commercial banks and cooperative banks, coming into effect on January 1, 2026. This timeline allows banks to prepare for compliance with the new regulations, ensuring a smooth transition to the updated procedures.
Simplified Procedures for Claim Settlement
The directions outline specific procedures for settling claims based on whether a nomination exists. For accounts with a nominee or survivorship clause, banks can settle claims without requiring additional legal documents, provided they have verified the identity of the nominees and the deceased status of the account holder. This approach significantly reduces the burden on families during a difficult time.
For accounts without a nominee, banks are required to adopt a simplified procedure for claims up to a threshold limit of ₹15 lakh. In such cases, banks can settle claims based on a claim form, death certificate, and officially valid documents, without insisting on a succession certificate or other legal documentation, as long as there are no disputes among legal heirs.
Treatment of Pipeline Flows
To avoid hardship for the nominees or legal heirs, banks are instructed to obtain authorization regarding the treatment of pipeline flows in the name of the deceased account holder. This ensures that any pending transactions are handled appropriately, either by crediting them to a new account or returning them to the remitter.
Premature Termination of Term Deposits
The directions also address the premature termination of term deposits in the event of a depositor’s death. Banks must allow such term deposits to be terminated without penal charges, even if they are within a lock-in period. This provision provides financial relief to the deceased’s family during a challenging time.
Compensation for Delays
In cases where claims are not settled within the stipulated timeframe of 15 days, banks are required to communicate the reasons for the delay and provide compensation to the claimants. This compensation will be in the form of interest on the settlement amount due, ensuring accountability and encouraging timely processing of claims.
Enhancing Customer Awareness
The RBI emphasizes the importance of customer awareness regarding the nomination facility and survivorship clauses. Banks are encouraged to promote these facilities and provide clear information on the procedures for settling claims, ensuring that customers are well-informed about their options.
Conclusion
The RBI (Settlement of Claims in respect of Deceased Customers of Banks) Directions, 2025 represent a significant advancement in the banking sector’s approach to handling the sensitive issue of claims settlement for deceased customers. By standardizing procedures and simplifying documentation requirements, the RBI aims to alleviate the burdens faced by families during a difficult time. As these directions come into effect, it is crucial for banks to implement these changes effectively, ensuring a smoother and more compassionate experience for customers and their families.