What changed
RBI observed that some UCB branches are not following the simplified procedure for settling claims of deceased depositors, particularly insisting on indemnity bonds or legal representation from nominees. This circular reiterates the existing instructions from July 2005, emphasizing that banks must adhere to the simplified process without additional documentation.
What it means for you
UCBs must immediately ensure all branches comply with the simplified claim settlement process to avoid customer harassment and regulatory action. For accounts with survivor/nominee clause, no succession certificate, probate, or indemnity bond is required. For accounts without such clause, banks can set a threshold for claims settled with only a letter of indemnity, based on their risk management.
What you must do
- Instruct all branches to strictly follow the simplified procedure for deceased depositor claims, especially for accounts with survivor/nominee clause.
- Ensure no branch demands succession certificate, probate, letter of administration, indemnity bond, or surety from nominees/survivors for any claim amount.
- Review and communicate the minimum threshold limit for accounts without survivor/nominee clause where only a letter of indemnity is needed.
- Provide guidance to deposit account holders and publicize the simplified process widely.
- Acknowledge receipt of this circular to the respective Regional Office.
Who it affects
All Primary (Urban) Co-operative Banks, Branch managers and staff handling deposit claims, Nominees and survivors of deceased depositors
Can a UCB ask for an indemnity bond from a nominee for a deceased depositor's account with a survivor clause?
No. RBI has clarified that for accounts with a survivor/nominee clause, banks must not insist on any indemnity bond, surety, succession certificate, or probate, regardless of the amount in the account.
What documentation is needed for accounts without a survivor/nominee clause?
Banks can set a minimum threshold limit based on their risk management. For claims up to that limit, only a letter of indemnity from the claimant is required, without additional legal documents.
What should a UCB do if a branch is found violating these rules?
The bank must immediately instruct the branch to comply with the simplified procedure and ensure no further insistence on unnecessary documentation. RBI expects strict adherence to facilitate hassle-free settlement.