What Happens to Your Bank Money After Death? RBI’s Rule for Nominees Explained

What happens to a bank account after the account holder dies? RBI guidelines say eligible claims should be settled within 15 days after receiving the claim, subject to required proof and identification.

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What happens to the bank balance?

The bank does not just keep the money if an account holder passes away. RBI guidelines clearly state that a valid nominee, joint account holder, or legal heir can claim these funds.

You must first inform the home branch in writing about the death. The bank will immediately freeze the account to stop any unauthorized transactions.

Next, they will check if the account has a registered nominee or operates as a joint account.

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How a nominee can claim the money

• Claiming the money is super easy if the account has a registered nominee.
• The nominee just needs to get a 'Claim Form for Nominee' from the bank, fill in the details, and submit it.
• You must attach the original death certificate and the nominee's KYC documents, like Aadhaar and PAN, with the filled form.
• Bank officials will then verify the submitted documents and the nominee's details.
• Once verification is done, the bank will transfer the account balance to the nominee's bank account or issue a Cheque/DD as per their standard process.

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Claim process without a nominee

• Legal heirs must approach the bank to claim the money if the account has no registered nominee.
• The bank might ask for specific documents depending on the claim amount and their internal rules.
• You need to submit a legal heir certificate obtained from the Tahsildar.
• All legal heirs must sign an indemnity bond, taking full responsibility if someone else claims the money in the future.
• Other heirs must provide a No Objection Certificate (NOC) if one primary heir is receiving the funds.
• Document requirements can change based on whether the amount is small or large.

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Rules for joint bank accounts

If the account operates on an 'Either or Survivor' basis, the surviving account holder can submit the death certificate and either continue running the account or claim the money.

If the account operates on a 'Jointly' basis, the surviving member cannot just withdraw the entire amount on their own.

The survivor can only get the money with the written consent of the deceased person's legal heirs.

Things to keep in mind:

• Using the deceased person's ATM card to withdraw money is a legal offense.
• The bank has the right to recover any pending loan dues of the deceased from this account balance.

The bank will transfer the money to the RBI's DEAF (Depositor Education and Awareness Fund) if nobody claims it for over 10 years.

Gathering the required documents:

• Death Certificate: Original and a copy.
• Bank Documents: The deceased person's passbook, cheque book, and ATM/Debit card.
• Claimant's Documents: ID and address proof like Aadhaar and PAN card.
• Nominee details: ID and bank details of the nominee, if applicable.

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The RBI 15-day settlement rule

• The nominee or claimant must submit a formal claim to the bank after the account holder passes away.
• The bank must settle the claim within 15 days from the date they receive the claim, provided you submit the death certificate and all valid documents.

The bank calculates this 15-day deadline from the exact day you submit the complete paperwork.

For example:

Let's say a person passes away on September 1. The nominee submits the claim with all documents on September 5. If everything is correct, the bank must settle this claim within 15 days from September 5.

What about Fixed Deposits (FD)?

You can absolutely claim a Fixed Deposit in the deceased person's name. RBI guidelines state that banks must allow premature withdrawal of the FD so the claimant can get the money.

You do not need to wait for the FD maturity date. The nominee or legal heir can just approach the bank, submit the death certificate, claim form, and KYC, and get the funds.

Why adding a nominee is crucial:

• Registering a nominee in your bank account makes things incredibly easy for your family.
• It simplifies the entire claim settlement process if the account holder dies unexpectedly.
• The RBI strongly advises everyone to use the nomination facility for bank accounts and other financial assets.

So, make sure you check who is registered as a nominee in your family members' bank accounts. You can easily update the details with the bank if the nominee has changed or if you haven't added one yet.