What changed
RBI issued new instructions on July 19, 2005 (circular RBI/2005-06/69 RPCD.CO.RRB.BC.22 /03.05.33/2005-06) superseding earlier 2000 and 2001 circulars, based on CPPAPS recommendations. For accounts with nomination or survivorship clause, banks must pay the survivor/nominee without requiring succession certificate, probate, or indemnity bond. For accounts without such clauses, banks can set a threshold for simplified settlement with just a letter of indemnity.
What it means for you
RRBs must now process deceased depositor claims faster, reducing distress for families. Banks lose the right to demand legal representation or indemnity for nominated/survivor accounts, but must verify identity and death through documents. This increases operational efficiency but requires robust risk management for threshold-based settlements.
What you must do
- Update internal policies to eliminate requirement of succession certificate, probate, or indemnity bond for accounts with valid nomination or survivorship clause.
- Establish clear due diligence procedures to verify survivor/nominee identity and death of account holder using documentary evidence.
- Set a threshold limit for accounts without nomination/survivorship clause, allowing settlement with only a letter of indemnity up to that limit.
- Train staff on new simplified process and ensure no insistence on unnecessary legal documents.
- Communicate the simplified procedure to customers and branches to avoid confusion.
Who it affects
All Regional Rural Banks (RRBs), Survivors and nominees of deceased depositors, Legal heirs of deceased depositors without nomination, RRB branch staff handling claim settlements
Can RRBs still ask for a succession certificate if the account has a nomination?
No, for accounts with a valid nomination or survivorship clause, banks must not insist on succession certificate, letter of administration, probate, or any indemnity bond, regardless of the amount.
What if the deceased depositor had no nomination or survivorship clause?
Banks can set a threshold limit for the account balance. Up to that limit, claims can be settled with just a letter of indemnity from the legal heir, without other documentation.
Does payment to a survivor or nominee fully discharge the bank's liability?
Yes, provided the bank has verified the survivor/nominee identity and death through documents, and there is no court order restraining payment. The survivor/nominee receives the amount as trustee for legal heirs.