What changed
RBI clarified that claims for missing persons must follow Indian Evidence Act Sections 107/108, requiring a court presumption of death after 7 years. Banks are advised to formulate a policy for such claims, considering legal opinion and case specifics. For smaller claims, banks may set a threshold to settle without full documentation, using only FIR, non-traceable report, and indemnity letter.
What it means for you
Banks must now have a clear policy for missing person claims, balancing legal requirements with customer convenience. The threshold limit allows faster settlement for smaller amounts, reducing hardship for common persons. Banks need to integrate risk management systems to handle these claims efficiently.
What you must do
- Formulate a board-approved policy for settling claims of missing persons, incorporating legal opinion and case-by-case assessment.
- Set a threshold limit for claims that can be settled with only FIR, non-traceable report, and indemnity letter, based on your risk management framework.
- Ensure that for claims above the threshold or without simplified documentation, a court presumption of death under Section 108 of the Indian Evidence Act is obtained.
- Train staff on the new process to handle such claims consistently and avoid customer inconvenience.
Who it affects
All scheduled commercial banks (excluding RRBs), Legal heirs and nominees of missing persons, Bank legal and compliance departments, Branch managers handling claim settlements
What is the minimum period before a missing person can be presumed dead for claim settlement?
As per Section 108 of the Indian Evidence Act, 1872, a presumption of death can be raised only after seven years from the date the person was reported missing.
Can banks settle missing person claims without a court order?
Yes, for claims up to a threshold limit set by the bank, settlement can be done using only FIR, non-traceable report from police, and a letter of indemnity, without a court order.
What documents are needed for simplified settlement of missing person claims?
For claims within the bank's threshold, only the FIR, non-traceable report issued by police authorities, and a letter of indemnity are required.