Nominee, survivorship clause can ease heirs' bank account, locker claims

For claims without a nominee, heirs should be prepared to submit succession certificates or letters of administration for larger amounts

To ease the burden on nominees and legal heirs, the Reserve Bank of India (RBI) has proposed new norms requiring banks to settle claims related to deposit accounts and safe deposit lockers within 15 days of receiving a request, through the use of standardised forms and uniform procedures.

 

The draft directions, open for feedback until August 27, also prescribe compensation for delays. The revised norms will be implemented from January 1, 2026.

 

Claim settlement thresholds 

Currently, Indian banks have their own claim settlement thresholds—typically ranging between ₹5 lakh and ₹10 lakh—above which extra documentation and verification are required. Claims below this limit are settled with minimal paperwork.

 

“However, under the 2025 draft, banks must now determine a threshold limit for such claim settlements in line with their risk management systems, with a mandatory minimum of ₹15 lakh,” says Siddartha Karnani, partner, King Stubb & Kasiva, Advocates and Attorneys.

 

Claim settlement in case of valid nomination 

If a depositor has a valid nomination, banks may settle the account balance with the nominee(s) after verifying their identity, confirming the depositor’s death, and ensuring there are no restraints on payments by a court order. The nominee(s) must be informed that the funds are being handed over to them as trustees for the legal heirs, without affecting the heirs’ claims.

 

In the event of the death of a sole or joint locker hirer, banks must permit the nominee to access the locker. “Before granting access, however, the bank must verify the nominee’s identity, confirm the hirer’s death, check for any court orders restricting access, and inform the nominee that such access is being provided in the capacity of a trustee for the legal heirs,” says Karnani.

 

When there’s no nominee 

When a depositor dies without naming a nominee, banks must identify the legal heirs before releasing funds or allowing locker access. Currently, the process varies by bank and claim value, leading to inconsistent documentation requirements. For claims below a bank’s threshold, a simplified process applies—typically a letter of indemnity with basic supporting documents.

 

The 2025 draft guidelines standardise this by requiring a death certificate, legal heir certificate, claim form, and other specified documents, even for smaller claims.

 

For amounts above the threshold, banks now set their own rules, often seeking a succession certificate, letter of administration, or similar proof. The draft removes this discretion by listing the exact documents required, bringing uniformity.

 

A similar shift applies to lockers. “Instead of varying requirements, the draft mandates specific documents—death certificate, legal heir certificate, and claim form—for access in the absence of a nominee,” says Karnani.

 

Claim settlement in case of joint accounts 

If the joint account has a ‘survivorship clause’ such as ‘either or survivor,’ the surviving account holder can get the money by providing ID proof and the death certificate of the other holder. “If there’s no survivorship clause, the process of settlement is governed by a similar procedure as for no nomination cases,” says Mukesh Chand, senior counsel, Economic Laws Practice.

 

How does ‘survivorship clause’ affect settlement of joint accounts? 

A survivorship clause, according to the Banking Regulation Act, is an instruction given when opening a joint account stating that if one holder dies, the survivor(s) can operate or close the account—e.g., “either or survivor” or “anyone or survivor.” “This simplifies settlement after one holder’s death. If all joint holders die simultaneously, the regular settlement process applies,” says Chand.

 

“While the survivorship clause expedites access, it does not override India’s succession laws. Legal heirs retain the right to claim their share of the funds, even after the bank has settled the account with the survivor,” adds Karnani.

 

Settlement in case of a Will/No Will 

If a valid Will exists and is not disputed, the bank may act on it without requiring probate. “If the claim amount exceeds the prescribed threshold, if there is any dispute or doubt, or if probate is mandated by law, then a probate, letter of administration, or court order will be necessary,” says Chand.

 

“In the absence of a Will, legal heirs may apply for Letters of Administration (without a Will) or a Succession Certificate (for movable assets), subject to the succession laws applicable to the deceased,” says Neerav Merchant, partner and head – Mumbai, Aquilaw.

 

Procedure for multiple legal heirs 

Recent amendments to the Banking Regulation Act allow multiple nominations to reduce disputes. “If multiple legal heirs claim funds without consensus, the bank will not release the money without a court order—such as probate, succession certificate, or decree,” says Chand.

 

Remember, a nominee is only a recipient on behalf of the legal heirs and must share the amount as per their entitlement.

 

Mistakes that delay claim settlements 

Common mistakes that delay claim settlements include the account holder not registering a nominee or survivorship clause; claimants submitting incomplete forms or missing ID/death certificate; failing to obtain no-objection/disclaimer letters from other heirs; or providing incomplete/incorrect heir details and KYC. “Disputes among heirs often force banks to demand court orders, and incomplete nominations can further complicate matters,” says Chand.

 

Whenever possible, the karta or head of the family should openly discuss the future distribution of movable and immovable property with all legal heirs. The karta should prepare and periodically update the Will, and where needed, consider a family trust or settlement that clearly outlines asset distribution.

 

“Legal heirs should ensure bank nominations align with the final Will, settlement, or trust deed. Legal advice should be sought to keep documents in line with personal laws, helping avoid disputes later,” says Merchant.

 

Documents required for claiming

 

Nominee: Claim form, death certificate, nominee’s ID and address proof.

 

No nominee, up to threshold: Claim form, death certificate, heir’s ID, legal heir certificate or declaration, no-objection letters or disclaimer letter, indemnity bond.

 

No nominee, above threshold: All the above, plus succession certificate/affidavit with sureties.

 

Locker: Similar documents, plus there’s an inventory process at the bank.