What changed
RBI clarified that UCBs must follow Sections 107/108 of the Indian Evidence Act for missing person claims, requiring a court presumption of death after 7 years. Banks are advised to formulate a policy and may fix a threshold limit for simplified settlement without full documentation.
What it means for you
UCBs now have a clear framework to handle missing person claims, reducing legal ambiguity. The option to set a threshold for simplified settlement helps banks manage risk while easing customer hardship, but requires careful policy formulation and legal review.
What you must do
- Formulate a board-approved policy for settling missing person claims, incorporating legal opinion and case-by-case assessment.
- Set a threshold limit up to which claims can be settled with only FIR, non-traceable report, and indemnity letter.
- Ensure claims above the threshold follow full legal process under Indian Evidence Act Sections 107/108.
- Train staff on the new procedure and document all settlements for audit compliance.
Who it affects
Primary (Urban) Co-operative Banks, Legal heirs and nominees of missing depositors, Bank compliance and risk management teams
What is the minimum period before a missing person can be presumed dead?
Under Section 108 of the Indian Evidence Act, a person can be presumed dead only after seven years from the date they were reported missing.
Can UCBs settle small claims without a court order?
Yes, if the bank sets a threshold limit, claims up to that amount can be settled using only an FIR, non-traceable report from police, and a letter of indemnity.
What documents are needed for simplified settlement?
For claims within the bank's threshold, only the FIR, police non-traceable report, and a letter of indemnity from the claimant are required.