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Settlement of Claims

Operational Procedure for Settlement of Claims of Deceased Depositors and Return of Articles in Safe Deposit Lockers/Safe Custody

Settlement of Claims in respect of Missing Persons

Legal Position

The settlement of claims in respect of missing persons would be governed by the provisions of Section 107/108 of the Indian Evidence Act, 1872. Section 107 deals with presumption of continuance and section 108 deals with presumption of death. As per the provisions of Section 108 of the said Act, presumption of death can be raised only after a lapse of seven years from the date of his/her being reported missing. As such, nominee/legal heirs have to raise an express presumption of death of the subscriber under Section 107/108 of the Indian Evidence Act before a competent court. If the court presumes that he/she is dead, then the claim in respect of a missing person can be settled as is done for any other deceased accounts.

Adoption of simplified procedures to avail inconvenience and undue hardship to the common person

Obtaining court order regarding presumption of death could prove to be costly and time consuming for a common person. Hence the RBI has suggested that bank may follow a simplified procedure for settlement of such claims up to a threshold limit to be fixed by individual having regard to the risk involved. These guidelines will help the bank to settle the claims in respect of missing person after considering the legal opinion and taking into account the facts and circumstances of each case to avoid inconvenience and undue hardship to the common person. It is likely that some banks may be having in place more simplified procedures for settlement of such claims in low risk category accounts.

Bank has fixed threshold limit of Rs.2 lacs as on date of FIR ( taking into all accounts and interest upto date of FIR.)

Settlement of claims within threshold limits (Upto Rs.2 lacs)

Settlement of claims where a person is missing for the last 7 years and more where declaration/certificate from court is not produced

In cases where the credit balance in the account of a missing person is not large, the claimants may find it expensive and cumbersome to obtain order from the court. In order to avoid hardship and cost involved to the claimants in approaching the court for settling small claims in respect of missing persons, the RBI advised banks to put a threshold limit for settlement of claims without insisting for submission of declaration/certificate from the court. The bank has fixed threshold limit of Rs.2 lacs for this purpose.

The Bank (in such cases) shall settle the claims on production of the following documents:
  • FIR with the Police
  • Final Report of police authority stating that the persons is not traceable.
  • Letter of indemnity along with two sureties acceptable to the bank for the value of the amount released. ( as per format given in chapter 2 part-II)
In settling the claims on the basis of FIR and Final Report the following points should be taken care of.
  • FIR should have been lodged with the police and the police should have put up the Final Report stating that the person is non-traceable that the individual has not been traced after all efforts have been made by the police.
  • FIR should have been filed only by those persons who would naturally have heard of him;
  • FIR should be lodged with the concerned police station at a place where the person was found to be missing or in his permanent residence or at a place he was residing for the last one year;
  • The date of disappearance of the person will be reckoned from the date of First Information Report with the police.
Apart from above, the following are also required to be considered

The credit balance in the account including accrued interest up to the date of submission of application for settlement of claim submitted to the branch to be considered for arriving at threshold limit of Rs.2 lacs. However, interest up to the date of settlement of claim is to be given to the claimant. In case, the balance amount together with interest on the date of submission of application comes more than Rs.2 lacs then the claimant has to produce declaration/certificate from the competent court for settlement of the claim.

Simplification of process for settlement of claims in respect of deceased depositors’ accounts –Upto Threshold limit


Documents, which are required to be submitted along with the claim form:

  • Proof of death of depositor(s) or hirer(s)
  • Proof of identification of nominee(s) wherever is applicable such as Election ID Card, PAN Card, Passport, Aadhaar letter etc., or any other satisfactory proof of identification acceptable to the bank or proof of authority of legal heir(s) wherever is applicable

Bank should exercise due care and caution in ascertaining the identity of legal heir(s) /nominee(s) and the fact of death of the account holder, through appropriate documentary evidence. If necessary, any official of the bank shall visit the place of the depositors to enquire about the genuineness of such claims.

It should be made clear to the survivor(s)/nominee(s) that he / they would be receiving the payment from the member bank as a trustee of the legal heirs of the deceased depositor, i.e., such payment to him / them shall not affect the right or claim which any person may have against the survivor(s)/nominee(s) to whom the payment is made.

It may be noted that since payment made to the survivor(s) / nominee(s), subject to the foregoing conditions, would constitute a full discharge of the bank's liability, insistence on production of legal representation is superfluous and unwarranted and it would only serve to cause avoidable inconvenience to the survivor(s)/nominee(s). In such case, therefore, while making payment to the survivor(s)/nominee(s) of the deceased depositor, the bank should not insist on production of succession certificate, letter of administration or probate, etc., or obtain any bond of indemnity or surety from the survivor(s)/nominee(s), irrespective of the amount standing to the credit of the deceased account holder.

In case where the deceased depositor had not made any nomination or for the accounts other than those styled as "either or survivor" (such as single or jointly operated accounts), bank may adopt a simplified procedure for repayment to legal heir(s) of the depositor keeping in view the imperative need to avoid inconvenience and undue hardship to the common person. In this context, bank will, keeping in view its risk management systems, fix a minimum threshold limit, for the balance in the account of the deceased depositors, up to which claims in respect of the deceased depositors would be settled without insisting on production of any documentation other than a letter of indemnity.(Threshold limit has been given in part-3 supra)

Time Norms for settlement of claims

Bank will settle the claims in respect of deceased depositors and release payments to survivor (s)/ nominee in case of accounts with survivor/ nominee within a period not exceeding 15days from the date of receipt of the claim subject to the production of proof of death of the depositor and suitable identification of the claimant(s) to the bank’s satisfaction. In the case of accounts without survivor/ nominee clause the claim should be settled within 1 month from the date on which the requisite documents have been submitted.

Competent authority for settlement of claims

Keeping in view the objective of settling the claims within a period not exceeding 15 days from the receipt of the claim and the risk management policy, bank may specify clearly monetary limits for different levels of officers for settlement of claims. ( As specified in Discretionary Administrative Powers, Bank’s Publication No.154 )

Premature termination of Term Deposits Accounts and payment of interest / other issues relating to Term Deposit Account

In the case of term deposits, a clause in the account opening form itself to the effect that in the event of the death of the depositor(s), premature termination of term deposits by the survivor(s)/ nominee/ legal heirs would be allowed has been incorporated. The conditions subject to which such premature withdrawal would be permitted may also be specified in the account opening form. Such premature withdrawal would not attract any penal charge.

Payment of interest in case of term deposit accounts of deceased depositor(s)

In case of a term deposit standing in the name/s of –
  • a deceased individual depositor, or
  • two or more joint depositors, where one of the depositors has died, interest shall be paid in the manner indicated below
(i) on the maturity of the deposit: at the contracted rate
(ii) In case of premature withdrawal by legal heir(s)/nominee/legal heir , i.e., in the event of the payment of deposit being claimed before the maturity date :
“In the event of payment of deposit being claimed before the maturity date, the branches should pay interest at the applicable rate or the Contracted Rate whichever is lower without charging penalty.”
(iii) In case of deposit being claimed after the date of maturity:

In the event of death / missing of the depositor before the date of maturity of the deposit and amount of the deposit is claimed after the date of the maturity, the branches should pay interest at the contracted rate till the date of maturity . From the date of maturity to the date of payment, the branches should pay simple interest at the applicable rate operative on the date of maturity for the period for which the deposit remained with Bank beyond date of maturity.

Splitting of Term Deposit

If, on request from the claimant/s, the bank agrees to split the amount of term deposit and issues two or more receipts individually in the names of the claimant/s, it shall not be construed as premature withdrawal of the term deposit, provided the period and aggregate amount of the deposit do not undergo any change.

Treatment of flows in the name of the deceased depositor

In order to avoid hardship to the survivor(s) / nominee of a deposit account, bank may obtain appropriate agreement / authorization from the survivor(s) / nominee with regard to the treatment of pipeline flows in the name of the deceased account holder. In this regard, bank could consider adopting either of the following two approaches:

The bank could be authorized by the survivor(s) / nominee of a deceased account holder to open an account styled as 'Estate of Shri , the Deceased' where all the pipeline flows in the name of the deceased account holder could be allowed to be credited, provided no withdrawals are made.


The bank could be authorized by the survivor(s) / nominee to return the pipeline flows to the remitter with the remark "Account holder deceased" and to intimate the survivor(s) / nominee accordingly. The survivor(s) / nominee / legal heir(s) could then approach the remitter to effect payment through a negotiable instrument or through ECS transfer in the name of the appropriate beneficiary.

Provisions of Law regarding Legal heirs


If the deceased is a male Hindu, dying in testate, it must be ascertained whether there are one or more Class-I legal heirs. - The following are called Class-I legal heirs: mother, widow, son, daughter, son of a predeceased son, son/daughter of a predeceased daughter, son or daughter or widow of a predeceased son of a predeceased son, widow of a predeceased son, son / daughter of predeceased daughter of predeceased daughter, daughter of predeceased son of a predeceased daughter, daughter of predeceased daughter of predeceased son also. All Class-I legal heirs take simultaneously to the exclusion of any other legal heir and no one takes precedence over the other.

- The Class-II legal heirs are classified in different Entries and legal heirs

belonging to Entry-I will be preferred to the second entry and so on in succession. But there is no preference among these falling in the same entry and they take their share simultaneously

  • Entry-I - Father
  • Entry-II - (a) Son's daughter's son, (b) Son's daughter's daughter (c) Daughter's Daughter’s son, (d) Daughter's daughter's daughter (e) brother and sister.
  • Entry-III- Son/ daughter of daughter's son and son /daughter of daughter's daughter.
  • Entry -IV - Gives son/daughter of brother or sister as the heirs and many more.

In case, the deceased is a married female Hindu, who died intestate, the following are her legal heirs. (a) Sons & daughters (including the children of any predeceased son) & the husband; (b) Heirs of husband; (c) Mother & Father, (d) Heirs of father; (e) Heirs of Mother.

If a female Hindu who dies intestate does not have son/daughter, the property inherited from her parents goes to heirs of father whereas if the same is inherited from husband or parents-in-law, heirs of husband will inherit the property.


  • Where the deceased is a Christian, Indian Succession Act governs the intestate succession.
  • As per the provision of this Act, the widow of the male intestate is entitled to one-third of the property while the remaining two-third goes to lineal descendants (i.e. sons & daughters) in equal shares. If he has none, whole property passes to his widow.
  • If the male intestate has left no lineal descendant, one half goes to the widow and other half to the kindred (i.e., father, mother, brother, sister).
  • In case a Christian female dies intestate, husband has the same right.


Inheritance in the case of Muslims is governed by the Sunni or shia law depending upon the sect in which they belong to.

According to Sunni law the classes of heirs are

Sharers --- Heirs by consanguinity

  • Ascendants : Father, True grandfather, Mother, True grandmother
  • Descendents: Daughter, Son's daughter,
  • Collateral : Full/consanguine sister, uterine brother/sister Heirs by affinity - husband , wife

But these 12 sharers will inherit fixed shares subject to conditions. A sharer may be excluded by many reasons such as nearer in blood will exclude remote one in one class. Sometimes sharer may be converted as residuary or otherwise one sharer may be partly sharer and partly residuary.

Residuary category

After fixed share is allotted to the sharers the residue left is devolving upon the residuary:

Children male or female of deceased, of son of deceased, of father of deceased, male descendents of true grandfather.

Son is always a residuary. Daughter with son becomes residuary. Among these, descendents exclude all others. Ascendants exclude all others except descendents and descendents of nearer ascendants exclude those in remote. In each class of residuary nearer blood excludes remote one. Division among these is according to the rule of double share to the male and if only one sex is there then equally divided.

In the absence of sharers and residuary estate devolves upon his other blood relations i.e., distant kindred

According to Shia law the heirs are

Heirs by consanguinity I (i) Parents
(ii) Children & descendents
II (i) Grand parents (true/false)
(ii) Brother or sister and descendents
III Paternal or maternal uncle of him or his parents and grandparents

Heirs by Marriage : Husband, wife

Heirs by consanguinity and heirs by affinity succeed simultaneously. Among heirs by consanguinity those in class I exclude those in class II. The heirs in two sections of class I succeeds together. In each section nearer in degree exclude the remote. The son always takes as a residuary.

A certificate from Muslim Jama-I-eth in the letterhead signed by the head of the institution to which the deceased was affiliated should be obtained giving details of legal heirs with their age. In case of male deceased, a categorical certificate to the effect that the deceased had not married any woman other than the one named in the list is to be insisted upon.

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