NOMINATION FACILITY AND SETTLEMENT OF CLAIMS

The nomination facility is intended to facilitate expeditious settlement of claims in the accounts
of deceased depositors and to minimize hardship caused to the family members on the death of
the depositors.

 Makes payment to the nominee of a deceased depositor, of the amount standing to the
credit of the depositor.
 Available in Current account, Savings account, Term Deposit account, Recurring Dep
account etc.
 Nomination facility is intended for individuals and sole proprietorship concerns
 Return to the nominee, the articles left by a deceased person in the bank’s safe custody.
 Release to the nominee of the hirer, the contents of a safe deposit locker, in the event of
the death of the hirer.
 As per Sec.45 ZA to 45ZF of the BR Act 1949
 Nomination not to be attested except in the case of account of illiterates, thumb
impression of illiterate account holders to be attested by two witnesses.
 Nomination cannot be made in accounts where deposits are held in a representative
capacity e.g. trust account and in account of partnership firms, HUF, companies,
associations, clubs etc.
 Nomination can be made in favour of one person only.
 In case of joint account of individuals, nomination should be made by all depositors
jointly.
 In case of minors account, nomination should be made by a person lawfully entitled to act
on behalf of the minor.
 Nomination favouring the minor is permitted on the condition that the account holder,
while making the nomination, appoints another individual, not being a minor, to receive
the amount of the deposit on behalf of the nominee in the event of the death of the
depositor during the minority of the nominee.
Thus in the event of death of the holder of a deposit account, a customer who has kept
articles in safe custody with the bank, or the hirer of a safe deposit locker, the nomination
facility enable the bank to release to the nominee, the deposit amount, or the articles left in
safe custody or held in safe deposit lockers, as the case may be without insistence on a
succession certificate or probate of the wil from the legal heirs of the deceased account
holder/customer.
 Nomination wil continue to be in force even on renewal of term deposit, unless
specifically cancelled or changed.
 Separate nomination forms should be obtained for each term deposit accounts.
 A non-resident can be nominated as a nominee in a resident account.
 Procedure

When an account holder is dead, the fact and the source of information should be noted in the
relative account in the system, account opening form and other necessary records. Bank should
make a note in the account in the computer system, account opening form etc.

In all cases, debits to such accounts should be passed only by the Bank Branch after making
discreet enquiries. The death certificate should be called for and duly noted. A copy thereof
should be maintained on branch records.

Cheques presented for payment after receipt of notice of the death of a customer, must be
returned with the reason ‘Drawer deceased’. Where a person draws a cheque under an authority
or mandate and subsequently dies, the bank can pay such cheques, as the account holder, the
principal is still alive.
Payment of balance in the account of the deceased account holder

Payment of balances at the credit of deposit account of deceased person in case of single account
or in case of death of all joint account hoklder in case o fjoint accounts, may be made to their
legal heirs/’nominee on the basis of:

 Nomination
 Indemnity Bond
 Legal Representation
 a) Accounts with survivor/nominee clause:

The payment of the balance in the deposit account to the survivor/nominee of a deceased
account holder represents a valid discharge of the bank’s liability provided;

i) The bank has exercised due care and caution in establishing the identity of the
survivor/nominee.
ii) There is no order from the competent court restraining the bank from making the
payment from the respective account.
iii) It has been made clear to the survivor/nominee that he would be receiving the
payment from the bank as a trustee of the legal heirs of the deceased depositor.

Such payment made to the survivor/nominee, subject to the foregoing conditions, would
constitute a full discharge of the bank’s liability.
Time Period for settlement

Banks are advised to settle the claims in respect of deceased depositors and release payment to
survivors/nominees within a period of 15 days from the date of receipt of the claim subject to the
production of proof of death of the depositor and suitable identification of the claimants.

In the event of the death of one of the joint account holders, the right to the deposit proceeds
does not automatically devolve on the surviving joint deposit account holder, unless there is a
survivorship clause.
Payment to legal heirs/claimants on the basis of Indemnity Bond

When a claim is not supported by a legal representation, claims may be entertained for payment
against indemnity signed by all claimants, with or without surety by the branches.

Payment on the basis of legal representation

Legal representation, ie., Probate of Will or Letter of Administration or Succession Certificate or

Administrator General’s Certificate to the estate of the deceased.
Access to safe deposit lockers/return of safe custody articles (with survivor/nominee clause)

If the sole locker hirer nominates a person, banks should give to such nominee access of the
locker and liberty to remove the contents of the locker in the event of the death of the sole locker
hirer.

In case of joint signature operation, if one of them deceased, then bank should give access of the
locker to the survivors and the nominee to the locker.

In case of survivorship clause, ie, Either or survivor, Anyone or survivor or former or survivor it
can be permitted accordingly.
The following precaution should be taken:

1. Due care and caution exercised in establishing the identity of the nominee/survivor.
2. No Court order exists restraining the Bank in giving access to the locker
3. Banks should make it clear to the survivor/nominee that access to locker/safe custody
articles is given to them only as a trustee of the legal heirs of the deceased locker hirer.

Payment of interest on Deceased accounts

In the case of deceased current and cash credit accounts of the individuals and sole
proprietorship, simple interest applicable to savings Bank accounts, be paid on credit balances
from the date of death, till the payment to the legal heirs.

Interest is not to be paid in the account of joint individuals, Partnership firms and HUF firms etc.
Settlement of claims in respect of Missing Persons

As per Sec.108 of the Indian Evidence Act 1872, if a person’s whereabouts are not known for
seven years, there is a presumption of death. Such presumption is available to the court in a suit
for declaration, then the claim in respect of a missing person can be settled accordingly. It is
civil death. Such persons account can be treated in the same way as of the account of a deceased
person