What changed
RBI clarified that claims for missing persons must follow Indian Evidence Act Sections 107 and 108. Banks are now advised to formulate a policy for such claims, considering legal opinion and case-specific facts. Additionally, banks may set a threshold limit for simplified settlement without full documentation, using only FIR, non-traceable report, and indemnity letter.
What it means for you
Co-operative banks must now have a formal policy for handling missing person claims, reducing ambiguity. This allows faster settlement for smaller claims, easing customer hardship, but requires banks to assess risk and set internal thresholds. Banks need to balance legal compliance with customer convenience.
What you must do
- Formulate a board-approved policy for settling claims of missing persons, incorporating legal opinion.
- Set a threshold limit for simplified claims settlement using FIR, non-traceable report, and indemnity letter.
- Ensure claims above threshold follow full legal process under Indian Evidence Act Sections 107/108.
- Train staff on handling missing person claims and required documentation.
Who it affects
State and District Central Co-operative Banks, Nominees and legal heirs of missing persons, Bank legal and compliance teams
What is the legal basis for settling missing person claims?
Claims are governed by Sections 107 and 108 of the Indian Evidence Act, 1872. Section 108 allows presumption of death after seven years of being missing, but a court order is needed.
Can we settle small claims without a court order?
Yes, RBI allows banks to set a threshold limit for simplified settlement using only FIR, non-traceable report, and indemnity letter, subject to risk management.
What documents are needed for simplified settlement?
For claims within the bank's threshold, you need the FIR, a non-traceable report from police, and a letter of indemnity from the claimant.