What Happens to Money in a Bank Account After the Account Holder Dies? Nominee Can Make the Claim Process Easier

RBI Guidelines Aim to Make Settlement of Death-Related Bank Claims Simpler and Time-Bound

New Delhi. Money lying in a bank account does not disappear when the account holder dies. The balance in savings accounts, fixed deposits and other eligible deposits can be claimed by the person entitled to receive it, subject to the applicable banking and legal procedures.

For families dealing with the loss of a loved one, handling financial and administrative matters can be difficult. Having a nominee registered with the bank can make the process of submitting a claim considerably more straightforward.

Why Having a Nominee Matters

When a bank account holder has registered a nominee, the nominee can approach the concerned bank after the account holder’s death and initiate the claim process.

The nominee is required to complete the bank’s prescribed formalities and submit the documents requested by the institution. Since the nominee’s details are already recorded in the bank’s records, this can help simplify the process of establishing the person entitled to receive the deposit under the bank’s procedure.

However, it is important to understand that nomination and legal inheritance are not necessarily the same thing. Payment made by a bank to a nominee does not, by itself, determine the ultimate ownership or succession rights over the deceased person’s estate.

How Can the Claim Be Filed?

The claim process generally begins with the concerned bank branch or through an online facility, wherever the bank provides one.

The broad process usually involves three steps:

1. Check the bank’s claim procedure:
The claimant should contact the concerned branch or visit the bank’s official website to understand the procedure applicable to the deceased customer’s account.

2. Submit the claim form:
The prescribed form for a deceased customer’s account or deposit needs to be completed and submitted.

3. Provide the required documents:
The claimant must submit the documents specified by the bank. Requirements may vary depending on the type of account or deposit, nomination status and the bank’s records.

Therefore, claimants should obtain the latest document checklist directly from the concerned bank before submitting their application.

Claims to Be Settled Within 15 Days

The Reserve Bank of India has emphasised a time-bound mechanism for handling claims relating to deceased customers’ deposit accounts as well as articles held in safe deposit lockers or safe custody.

Where the required documents have been received and the prescribed procedure has been completed, eligible claims are subject to a 15-day settlement timeline under the applicable RBI framework.

The objective is to reduce unnecessary delays and help eligible claimants access the funds or belongings without being subjected to prolonged banking formalities.

Nomination Should Be Kept Updated

Registering a nominee is a relatively simple banking step, but it can become important for the family in the event of the account holder’s death.

Account holders should therefore ensure that nomination details are available and correctly recorded for their savings accounts, fixed deposits and other eligible banking deposits. Nominee details should also be reviewed whenever there is a significant change in family circumstances.

Keeping the information updated can prevent avoidable complications at a later stage.

Nominee Does Not Automatically Become the Legal Heir

One of the most important points for account holders and families to understand is that a nominee’s role is different from that of a legal heir.

A bank’s process for releasing money to a nominee and the question of who ultimately inherits the deceased person’s property are separate legal matters. Succession rights may depend on the applicable law, valid testamentary documents and other legal circumstances.

For this reason, families should not rely solely on nomination records. Important succession and asset-related documents should also be properly maintained.

A Small Step Today Can Help the Family Tomorrow

Account holders can make things easier for their families by keeping their banking information organised during their lifetime. Details of accounts, deposits and relevant documents should be maintained securely, while nominee information should be checked periodically.

Where appropriate, trusted family members may also be informed about the existence of relevant financial accounts and documents so that the family does not have to search for essential information during an already difficult period.

The RBI’s consumer awareness initiative, “RBI Kehta Hai,” also encourages people to remain informed and cautious about banking and financial matters.

Keeping your nominee details updated today can help reduce unnecessary paperwork and uncertainty for your family in the future.

For consumer awareness information, readers can visit the official “RBI Kehta Hai” platform.

(SDNA)