Procedure for claim settlement of FCNR/NRE deposits to non-resident nominees and others

Based on the Reserve Bank of Indi (RBI) advisory, Indian Bank’s Association (IBA) had circulated a Model Operational Procedure (MOP) for settlement of claims of deceased depositors. IBA had also finalized the guidelines for settlement of claims in respect of deceased locker- hirers/depositors of safe custody articles. All the Banks were advised to have a Board approved policy on claim settlement of deceased and missing persons. RBI also has, from time to time, issued detailed guidelines for evolving simplified procedure for settlement of claims in respect of deceased depositors as well as on various issues relating to safe deposit lockers/safe custody articles and settlement of claims in respect of missing persons. RBI vide their Circular RBI /2021-2022/86DOR.LEG.REC/40/09.07.005/2021-22 dated 18.08.2021 issued revised instructions on Safe Deposit Locker/Safe Custody Article Facility provided by the Banks.

Revised Guidelines for Settlement of Claims of Deceased Depositors and Locker Hirers

Based on the Reserve Bank of India (RBI) advisory, the Indian Banks’ Association (IBA) circulated a Model Operational Procedure (MOP) for the settlement of claims of deceased depositors. Additionally, the IBA finalized guidelines for settling claims related to deceased locker hirers and depositors of safe custody articles. All banks have been advised to adopt a Board-approved policy for claim settlements involving deceased and missing persons.

The RBI has periodically issued detailed guidelines to simplify procedures for settling claims of deceased depositors and addressing matters concerning safe deposit lockers and safe custody articles. The RBI, through Circular RBI/2021-2022/86 DOR.LEG.REC/40/09.07.005/2021-22 dated August 18, 2021, issued revised instructions on Safe Deposit Locker and Safe Custody Article Facilities provided by banks.

I. Procedure for Settlement of Claims Based on Nomination

For deposit accounts, lockers, or safe custody articles where the deceased account holder made a valid nomination under the Banking Companies (Nominations) Rules, 1985, and the nomination is duly registered in the bank’s records, branches shall release the balance amount or locker contents to the nominee.

It is clarified that payment or delivery to the nominee is in the capacity of a trustee for the legal heirs or legatees of the deceased. This action does not affect any other legal claims on the assets. Once the claim is settled with the nominee, the bank is discharged from all liabilities related to the account or locker.

Documents Required from the Nominee:

• Death Certificate issued by a competent authority
• KYC documents of the nominee (e.g., Voter ID, Aadhaar Card, Passport, Driving License, or other bank-accepted identification)

For Minor Nominees in Safe Deposit Lockers:

• An inventory of locker contents will be prepared in the presence of two independent witnesses, a bank officer (not associated with the locker facility), and the claimant.
• A declaration must be obtained from the nominee or a representative for the minor, confirming receipt of all contents and no objection to the locker being reallocated.

Branch-Level Settlement: Claims under nominations shall be processed at the branch level, irrespective of the claim amount, without linking it to the delegated powers for death claim settlements. However, all procedural requirements must be strictly followed.

II. Procedure for Settlement of Claims Based on Legal Representation

Settlement through legal representation includes claims settled upon submission of a Succession Certificate, a Probated Will, or a Letter of Administration.

Key Differences:

• Letter of Probate: Used when the deceased left a will. It is a certified copy of the will under the court’s seal, granting the executor authority over the estate. Probate is conclusive proof of the executor’s legal authority and the will’s authenticity.
  • Mandatory Probate: Required for wills by Hindus, Buddhists, Sikhs, or Jains made in Presidency towns (Chennai, Kolkata, Mumbai) and other areas notified by state governments.
• Succession Certificate: Issued by a civil court when no will exists. It authorizes the holder to collect debts and securities due to the deceased and facilitates the transfer of assets.
• Letter of Administration: Granted when there is no will or the executor named in the will is unable or unwilling to act. Beneficiaries can apply to the court for this document to manage the deceased’s estate.

By following these streamlined procedures, banks ensure efficient and legally compliant settlement of claims related to deceased depositors and locker hirers.

Identification: The identification of nominee whether resident or non-resident, the procedure is the same. The nominee can be identified by:
The identification of nominee whether resident or non-resident, the procedure is the same. The nominee can be identified by:

• Nominee swearing an affidavit before a Notary/Judicial
  Authority. Or
• Two officers of the Bank. Or
• Clients of the Branch or persons of repute known to
  the Branch.

The settlement of the claim involves the following procedures.

1. If the nominee, whether a Resident or Non- Resident, wants to utilise funds locally, payment can be made in Indian Rupees.
2. If the nominee is a non-resident Indian and he/she desires to repatriate claim proceeds abroad, same may be allowed if the deceased account holder was a Non-Resident at the time of death and the nominee is also an NRI at the time of claim;
3. The claim proceeds can be credited to nominee’s NRE a/c or repatriated abroad as per his/her instructions on fulfilling the below conditions. (i) The nominee shall submit an application in form LEG for remittance of balances along with a death certificate. (ii) In the case of all legal heirs of the deceased depositor are NRIs, a declaration to the above effect is to be obtained from the nominee, duly signed and witnessed.
4. In case of resident nominee wants remittance of funds outside India for meeting the liabilities of the deceased account holder, (if any) or similar other purposes, the application of the nominee should be forwarded to RBI for consideration.
5. In all other cases which do not satisfy the aforementioned terms and conditions or in case nomination is not registered by the depositor where the amount is in NRE/FCNR (B) account and same is claimed by a person other than the nominee, should be referred to the concerned Regional Office of Reserve Bank of India for prior approval by the AD (Authorised Dealer) branch in form LEG* supported by documents indicated therein together with the legal representation issued by an Indian court.

(The LEG application should be completed and submitted through an authorised dealer through whom the remittance is sought to be made to the office of Reserve Bank under whose jurisdiction the applicant resides).

*LEG refers to “APPLICATION FOR REMITTANCE OF LEGACIES, BEQUESTS OR INHERITANCES TO BENEFICIARIES RESIDENT OUTSIDE INDIA”. This is a statement of Indian assets of the deceased person, indicating the form in which they are held. The number and date of Reserve Bank’s approval for holding or acquiring shares of Indian companies and immovable property should be indicated, wherever applicable.

Originally posted on November 2019. Updated on 10.01.2025