The Reserve Bank of India (RBI) has introduced a sweeping set of reforms to ease the process of claim settlement for the families of deceased bank customers, bringing relief to millions of depositors and their heirs. The new rules, notified on 26 September 2025 under the title
“Settlement of Claims in respect of Deceased Customers of Banks” Directions, 2025, are aimed at eliminating the arbitrary and inconsistent practices that banks have followed for decades. These directions were first issued in draft form in August this year and have now been officially notified, making it mandatory for all commercial and co-operative banks to implement the changes by 31 March 2026.
The directions seek to address one of the most painful experiences for consumers, that of accessing funds, safe deposit lockers or articles in custody after the death of a relative. In many cases, despite the presence of a nomination or survivorship clause, families were compelled to produce succession certificates, probates of Wills or indemnities that involved significant expense and delays. RBI has now categorically stated that in the presence of a valid nomination or survivorship clause, such additional legal documents cannot be demanded by banks. Nominees or survivors will only have to furnish a claim form, a death certificate and proof of identity and the payment made to them will constitute a valid discharge of the bank’s liability. The directions also emphasise that the nominee or survivor will be deemed to hold the proceeds as a trustee for all legal heirs, protecting the rights of other claimants.
For accounts without a nomination or survivorship clause, RBI has introduced a graded approach depending on the size of the claim. Where the aggregate amount is below Rs15 lakh in the case of commercial banks and Rs5 lakh for co-operative banks, a simplified process will apply. This includes submission of a claim form, death certificate, proof of identity, indemnity bonds and a legal heir certificate, or in some cases, a declaration from an independent person well-known to the family and acceptable to the bank. Importantly, banks are barred from insisting on third-party sureties in such cases which has been a frequent irritant in the past. For claims above the threshold limit, legal documents such as a succession certificate or probate may be required, but even here, RBI has sought to reduce the scope for harassment by allowing banks to accept affidavits from independent persons in appropriate cases.
The reforms also cover deposits held in joint names, sole proprietorships and safe deposit lockers. For term deposits, banks will now have to permit premature withdrawal without imposing any penalty when a depositor dies, even if the deposit is within a lock-in period. In the case of lockers, nominees and survivors will be allowed access without producing legal documents, subject only to basic verification and the absence of any court orders. Banks must prepare an inventory of locker contents in the presence of witnesses, record the handover and obtain acknowledgments to ensure transparency. For claims relating to missing persons, a simplified process has been introduced for amounts up to Rs1 lakh, requiring only an FIR (first information report) and a non-traceable report from the police instead of a court declaration of civil death.
One of the most significant consumer-friendly provisions is the imposition of strict timelines and compensation for delays. Banks are required to settle deposit-related claims within 15 calendar days from the date of submission of all required documents. Failure to do so will attract penal interest at a rate not less than the prevailing bank rate plus 4% per annum on the amount due for the period of delay. For locker and safe custody claims, the compensation is set at Rs5,000 per day for any delay beyond the stipulated 15 days. This provision directly addresses the widespread complaints of heirs being made to wait indefinitely, often without any explanation or accountability from the bank.
To improve transparency and customer convenience, banks must adopt standardised claim forms (formats of which have been provided by RBI) and make them available at every branch as well as on their websites. They are also required to clearly list the documents needed for various claim scenarios and provide the option of lodging claims online. The directions mandate that claimants should be able to submit documents at any branch and receive an acknowledgement, with a confirmation issued once all necessary papers are in place. Online tracking facilities for claims are also to be introduced, representing a major step forward in reducing uncertainty and improving efficiency.
The issuance of these directions is in part the culmination of years of persistent advocacy by Moneylife Foundation which has consistently highlighted the plight of families caught in procedural tangles after the death of account-holders. The Foundation has documented through it’s report –
Challenges in Transmission of Assets to Nominees & Legal Heirs – how in the absence of regulator issued guidelines, banks were routinely imposing arbitrary requirements, forcing people into expensive and time-consuming legal processes. Moneylife Foundation has made
detailed representations to the regulator, stressing the need for a harmonised framework, strict timelines and penalties for banks that failed to comply. Many of these recommendations are now reflected in the new directions.
The changes are not merely procedural but signal a fundamental shift in the balance of power between banks and consumers. By standardising forms, introducing online claim facilities, setting clear timelines and mandating penalties for delays, RBI has sought to ensure that banks no longer exploit the grief and vulnerability of families. For consumers, this means that access to the rightful dues of a deceased relative will no longer be left to the discretion of branch officials or the policies of individual banks.
RBI has also asked banks to intensify their efforts in spreading awareness about the benefits of making nominations and using survivorship clauses at the time of opening accounts or lockers. This, combined with the new framework for claim settlement, is expected to minimise disputes and bring much-needed relief to ordinary citizens.
This will be real relief to grief stricken families.
This along with the quick transaction & credit of checks deposited will give relief to many people. Thanks to Money Life for bringing this matter to the notice of the RBI.