No blank spaces, please

Your legal heir will spend both time and money if you fail to name the nominee.

Rakesh Thakkar has been doing the rounds of the Agra branch of a reputed public sector bank since his father’s demise. His problem: Claiming his father’s Rs 20-lakh fixed deposit. Although Thakkar Senior always intended to give the amount to Rakesh, he did not mention him as a nominee in the documents submitted to the bank.

Now, Rakesh — one among six sons — needs to sort out the paperwork before staking a claim to the amount. And, lawyers say it could be a long haul. “It will be a time-consuming affair, which may take anywhere between six and eight months,” says Anju Gandhi, partner, S N Gupta & Co Advocates.

According to the Reserve Bank of India, as on December 31, 2009, Rs 1,360-crore unclaimed money is lying with banks. A major portion of the money belongs to Hindu Undivided Family and individual accounts. In the latter case, the account holder is no more. Under the law, banks have to hand over the contents of savings and current accounts, fixed deposits and lockers to the nominee. “The bank discharges its duty once it hands over the contents to the nominee. But if a legal heir approaches the court of law against the nominee, the bank cannot do so,” says Balwant Jain, chief financial officer, Apnapaisa.com.

With a view to avoiding hassles later, a few banks have made it mandatory to assign a nominee. In case the person does not want to nominate, he/she needs to give the bank a letter stating the reason for the same.
 

IF THERE IS NO NOMINEE
FOR SMALLER AMOUNTS, RS 1-5 LAKH, THE BANK WILL SEEK	FOR LARGER AMOUNTS, THE BANK WILL SEEK (IN ADDITION TO THE EARLIER DOCUMENTS)
An affidavit: Giving details of legal heirs who can receive the money  An indemnity bond: That protects the bank from any losses if there is a future claim	A succession certificate/probate/letter of administration: That will establish beyond doubt that the person is entitled to be the legal heir. This is irrespective of the existence of a will

Generally, if the amount in question is not large — between Rs 1 and Rs 5 lakh — banks may settle the case by seeking an affidavit and indemnity. But the limit differs from one bank to another. In cases like Thakkar’s where there is no nominee and there are six legal heirs, a settlement could be delayed significantly. An affidavit has all legal heirs nominated for receiving the money. An indemnity bond gives the bank protection. That is, the bank would not bear any loss in case of future claims regarding the account.

A few cautious banks could also ask claimants to publish a notice in newspapers, especially if the amount involved is more than the bank’s threshold limit for these cases. “As long as we can satisfactorily establish the legality of the claim, we do not push for a succession certificate, as it is both an expensive and a time-consuming process for the consumer,” says S Govindan, general manager, operations, Union Bank of India.

When huge money is at stake, banks insist on a succession certificate, probate or letter of administration. “The idea is to establish entitlement of the legal heir in a court of law, irrespective of the existence of a will by the deceased,” says Gandhi.

Obtaining any of these will entail court proceedings at a district court or high court level. The process is long-drawn, even if the claim is uncontested. Typically, once an application is submitted in the court, a notice is to be given in newspapers giving adequate time for claims, if any. Next, the court begins arguments, and if uncontested, can be expected to give a final order once the court fees are paid.

The fees could set one back by 2.5-4 per cent of the total amount being claimed. Other charges include publication fees for newspaper notices, besides the lawyer’s fees.