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Model Operational Procedure 3

The document discusses delays in banks settling claims by legal heirs of deceased account holders, causing hardship. It suggests comprehensive guidelines for settling such claims. The legal position requires banks to pay outstanding balances to legal heirs without a will or nomination. While nomination and joint accounts help, problems persist without a will. RBI issued guidelines simplifying settlement of deceased depositor claims and operating lockers.

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KrishnaPavan
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61 views1 page

Model Operational Procedure 3

The document discusses delays in banks settling claims by legal heirs of deceased account holders, causing hardship. It suggests comprehensive guidelines for settling such claims. The legal position requires banks to pay outstanding balances to legal heirs without a will or nomination. While nomination and joint accounts help, problems persist without a will. RBI issued guidelines simplifying settlement of deceased depositor claims and operating lockers.

Uploaded by

KrishnaPavan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Part 1 - Introduction

1.1. Delays in settlement of claims by legal heirs of deceased constituents of


banks cause considerable hardship to dependent legal heirs. Claims by legal
heirs could be in respect of deposits, safe custody articles or contents of lockers.
With a view to removing the hardships faced by Common Person, the RBI
Committee on Procedures and Performance Audit on Public Services (CPPAPS)
had suggested that the Reserve Bank of India may issue comprehensive
guidelines in the matter and IBA may be asked to draft and circulate a
comprehensive model operational procedure, which could be used by banks for
settlement of claims of deceased depositors and Safe custody articles.

1.2. The legal position is quite clear in the matter of deceased claims. In the
absence of nomination or clear mandate in respect of a joint account or a will left
behind by the deceased depositor, banks are expected to pay the stock (balance
outstanding) at the time of death of the person to all the legal heirs of the
deceased. Considering the risk involved, banks traditionally used to look for legal
representation (in the form of a succession certificate, letter of administration or
probate, etc) for settlement of claims. The system of obtaining operational
mandates in joint accounts emerged as a banking practice to overcome difficulties
in settlement of claims in deceased accounts. Subsequently, the statutes were
amended in 1985 to provide for nomination facility in bank deposits, safe deposit
lockers and safe custody articles. However, since nomination facility is optional at
the discretion of the depositor, problems and difficulties in settlement of deceased
claims persisted.

1.3. The Reserve Bank of India vide its Circular No. DBOD.No.Leg.BC.95
/09.07.005/2004-05 dated 9th June, 2005 had issued detailed guidelines for
evolving simplified procedure for settlement of claims in respect of deceased
depositors. The CPPAPS had also made recommendations for easy operation of
lockers. Taking into consideration these recommendations RBI had issued
detailed guidelines in respect of Safe Deposit Lockers and Safe Custody Articles

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