Did You Know? Banks May Soon Have to Pay You If They Delay Claim Settlements
The Reserve Bank of India has released a draft circular titled
“Settlement of Claims in respect of Deceased Customers of Banks” Directions, 2025.
These proposed rules aim to make it faster and easier for families to access funds, lockers, and valuables
after a customer’s death — and introduce penalties for banks that delay payments.
The new framework will apply to all commercial and co-operative banks from
January 1, 2026.
What happens if banks delay payment?
- Compensation for delay: If all required documents are submitted and the bank still doesn’t release funds or grant locker access within the set timelines, it must pay compensation to the claimant.
- How it’s calculated: Compensation will be linked to the applicable savings bank interest rate for the entire delay period.
- Covers deposits and lockers: The rule applies to both account balances and safe deposit locker contents.
Fast-track process when a nominee exists
If an account or locker has a registered nominee or a survivorship clause (e.g., “either or survivor”),
banks must settle without asking for succession certificates or probate of Will.
Required: claim form, death certificate, and nominee’s ID/address proof.
Payment is made to the nominee as a trustee for all legal heirs.
Quick settlement even without a nominee
For accounts without a nominee, claims up to a minimum of Rs. 15 lakh can be processed using a simplified procedure
— no lengthy court process required. Only basic documents, indemnity, and legal-heir declaration are needed.
For higher claim amounts
Claims above the threshold require a succession certificate or
legal heir certificate/affidavit along with the usual claim documents.
No penalty on FD withdrawals after death
Fixed deposits can be closed without penalty upon the depositor’s death, even during a lock-in period.
Joint deposits can be accessed based on a pre-agreed mandate.
Locker access made easier
Nominees or survivors will get locker access after verification, with contents inventoried in the presence
of witnesses for transparency. Without a nominee, access can still be given based on legal-heir documents and indemnity.
Handling incoming funds after death
Banks may either credit new inflows to a special “Estate of (Deceased)” account
or return them to the sender, depending on the family’s instructions.
For missing persons
Small claims for missing account holders can be settled on the basis of an
FIR + non-traceable report and indemnity, without waiting for lengthy legal processes.
Note: This is a summary of RBI’s draft rules. The final version may change when officially notified.
Always check the final circular and your bank’s guidelines for exact procedures.
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