There are two possibilities in a bank account maintained by a customer viz. (i) a deposit account is opened in a bank with a valid nomination or with the survivorship clause like ‘either or survivor’, or ‘anyone or survivor’, or ‘former or survivor’ or ‘latter or survivor’ etc. (ii) A deposit account is opened in a bank without a valid nomination or without the survivorship clause like ‘either or survivor’, or ‘anyone or survivor’, or ‘former or survivor’ or ‘latter or survivor’ etc.
When a deposit account is opened in a bank with a valid nomination or with the survivorship clause like ‘either or survivor’, or ‘anyone or survivor’, or ‘former or survivor’ or ‘latter or survivor’ etc. the banks may make payment of the balance in such deposit account to the specified nominee or survivor(s).
The payment to nominee/survivor(s) of the deceased person would constitute a full discharge of the bank’s liability on the compliance of the following.
- The death of the account holder is confirmed to the bank through appropriate documentary evidence (death certificate).
- Bank has verified properly the identity of the claimant(s) and made payments only after the establishment of the identity of the survivor(s) / nominee to the bank’s satisfaction.
- The bank has not received an order from the competent court restraining the bank from such payments.
- The claimants (survivor(s)/nominee) must be informed clearly that they would be receiving payment from the bank as a trustee to the legal heirs of the deceased depositor, i.e., such payment to him shall not affect the right or claim which any person may have against the survivor(s) / nominee to whom the payment is made. A letter of the undertaking shall be taken from such survivor(s)/nominee who have received the payment from the bank.
As per RBI guidelines, premature closure of the term deposit(s) is allowed in the event of the death of the depositor. Such premature closure of deposit would not attract any penal charges.
Related articles:
Claim settlement by banks where survivor/nominee clause does not exist
How banks settle claims of a missing person on presumed death
