RBI Directions on Settlement of Claims of Deceased Bank Customers (2025)

 The loss of a family member is already a heavy emotional burden. What often adds to the distress is the long, uncertain process of accessing the deceased’s bank deposits, locker contents, or safe-kept articles.

Recognising this, the Reserve Bank of India (RBI) issued comprehensive Directions on September 26, 2025, applicable to all commercial and co-operative banks, effective March 31, 2026. These Directions standardise and simplify procedures, fix clear timelines, and ensure fair compensation for delay.

This post is a practical yet analytical guide to help families, nominees, and legal heirs understand and claim what is rightfully theirs.

Why These Directions Matter

• Earlier issues: Every bank had its own claim process. Some insisted on succession certificates even when a nominee existed. Claims dragged on for months.

• Now: RBI has made the system uniform, time-bound, and transparent, with a 15-day deadline and penalties on banks for non-compliance.

Applicability

Covered: All banks regulated by RBI, including scheduled commercial banks, RRBs, and co-operative banks.
Assets covered:

• Deposit accounts (savings, current, fixed deposits, etc.)

• Lockers

• Safe custody articles

Core Principles of the RBI Directions

1. Nominee first: If a valid nominee exists, settlement must be simple and quick.

2. Small claims simplified: For claims up to ₹15 lakh (commercial banks) and ₹5 lakh (co-operative banks) without nomination, banks must settle on the basis of simplified documents—no need for court orders.

3. Strict timeline: Settlement within 15 calendar days of receipt of complete documents.

4. Compensation for delay:

   • Deposits: Bank Rate + 4% p.a. interest

   • Lockers/articles: ₹5,000 per day

5. Transparency: Banks must publish claim forms, checklists, and procedures on their website and in branches.

Procedure for Deposit Accounts

A. If Nominee Exists (or Joint Holder with Survivorship Clause)

• Submit:  Claim form, Death certificate,  ID proof of claimant

• Bank must release funds within 15 days.

B. If No Nominee, Claim ≤ Threshold (₹15 lakh / ₹5 lakh)

• Submit: Claim form + Death certificate + ID proof,  Indemnity bond, Legal heir certificate or declaration by an independent person

• Bank cannot insist on surety.

C. If Claim Above Threshold / Multiple Heirs / Dispute

• Legal representation required: Succession Certificate, Probate, or Letter of Administration.

• In case of disputes among heirs, the bank must wait for a court order.

Settlement of Locker / Safe Custody Contents

• Nominee present: Nominee gets access after due verification.

• Joint hirers: Surviving hirer + nominee together.

• Minor nominee: Guardian mentioned in nomination form receives contents.

Inventory requirement: Bank must prepare an inventory within 15 days in the presence of nominee/legal heir and two independent witnesses.

Special Cases

• Death abroad: Foreign death certificate valid if authenticated by: Indian bank overseas branch, or Correspondent bank, or Judge/Notary abroad, or Indian Embassy/Consulate, or Apostilled as per Hague Convention.

• Missing person cases:

  • Normally require court order declaring civil death.

  • Exception: For small claims (≤ ₹1 lakh, or higher if bank policy permits) → FIR + police “non-traceable” report accepted.

Bank’s Obligations

• Provide claim forms online and in branches free of cost.

• Accept and acknowledge claim applications with date-stamp.

• If documents are incomplete, issue a written list of pending documents.

• Ensure settlement within 15 days, or else pay compensation.

• Maintain internal monitoring and reporting to ensure compliance.

Compensation for Delay

• Deposits: Bank Rate + 4% p.a. interest for the delay period.

• Lockers/Articles: ₹5,000 per day of delay.

• Responsibility: Payment is mandatory; claimant need not prove loss.

Family Checklist

✔ Death certificate
✔ Claim form (downloadable from bank’s site)
✔ ID proof of nominee/heir
✔ Nomination details (if applicable)
✔ Indemnity bond (where required)
✔ Legal heir certificate or declaration (if no nominee, ≤ threshold)
✔ Succession certificate/probate (if above threshold or in dispute)
✔ FIR + police report (if missing person case)

Escalation Route

If bank delays or refuses without valid reasons:

1. Write to the Branch Manager quoting RBI Directions.

2. Escalate to the Bank’s Grievance Redressal Officer.

3. If unresolved within 30 days → File a complaint with the Banking Ombudsman under RBI’s Integrated Ombudsman Scheme.

Key Takeaways

• Simple for nominees: Minimal documents, 15-day deadline.

• Simplified for small claims without nomination.

• Strict compensation for delays.

• Clear procedures for lockers, safe custody, foreign deaths, and missing persons.

 Families now have a clear, uniform, and enforceable path to claim deposits and locker contents without unnecessary hardship.

Altman Z-Score: Financial Strength Test in Your MIS

The pandemic has brought many businesses to its knees, which now have an even higher amount of debt, continuing fixed costs, and lower contribution margins owing to sub-par sales figures.

Such times bring about the need for greater discipline in financial management. At this juncture, we recommend businesses to use the following test to track its credit strength and financial performance over the next few months, to ensure that it's on the path to recovery.

Objective of the Altman Z-Score

1. Predicting Bankruptcy: The Z-score is a value derived by running a test of credit strength on a business. The formula is used to predict the probability of an entity going into bankruptcy within two years.

2. MIS Reporting: Companies may use the formula to check their financial health by using simple values as taken from their profit & loss statements and balance sheet, computed as part of its MIS report. The score takes into account profitability, leverage, liquidity, solvency and activity of the enterprise.

3. Investment Decisions: Consider purchasing a stock if its Z-Score value is near 3, and consider selling if the value is closer to 1.8.

4. Economic Analysis: Prof. Altman had calculated that the median Z-score of manufacturing companies in the US in 2007 was 1.81. Such companies had a credit rating of B, mostly. This indicated that 50% of the firms should have had lower ratings, were highly distressed and had a high probability of becoming bankrupt. These calculations led him to believe a crisis would occur due to corporate defaults, which trickled in during 2009.

Calculation Formula

Where

A = Working Capital / Total Assets

B = Retained Earnings / Total Assets

C = Earnings Before Interest & Tax (EBIT) / Total Assets

D = Book (or Market) Value of Equity / Total Liabilities

E = Sales / Total Assets

For Privately Held Manufacturers: Z = 0.72A + 0.84B + 3.107C + 0.42D + 1.0E

For Publicly Traded Manufacturers: Z = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

For Non Manufacturers: Z = 6.56A + 3.26B + 6.72C + 1.05D

For Emerging Markets: Z = 3.25 + 6.56A + 3.26B + 6.72C + 1.05D

 

Evaluation

Private Manufacturing Companies:

Score                        Meaning

Below 1.23               Distress Zone - heading towards bankruptcy

1.23 to 2.9                Grey Zone - focus should be on improvement

Above 2.9                Safe Zone - good financial health

Public Manufacturing Companies:

Score                        Meaning

Below 1.8                 Distress Zone - heading towards bankruptcy

1.8 to 3                     Grey Zone - focus should be on improvement

Above 3                    Safe Zone - good financial health

Private Non Manufacturing Companies:

Score                        Meaning

Below 1.1                Distress Zone - heading towards bankruptcy

1.1 to 2.6                 Grey Zone - focus should be on improvement

Above 2.6               Safe Zone - good financial health

Calculation Sheet for Your MIS

Link

MSME: Guaranteed Emergency Credit Line (GECL Loan)

The GECL is a loan product announced by the Government as a measure to help fund business activities of the MSME sector during the months affected by the onset of the Covid-19 outbreak in India.

Salient Features

Type of Facility: Additional working capital term loan facility in case of Scheduled Commercial Banks (SCBs) and Financial Institutions (FIs), and additional term loan facility in case of Non-Banking Financial Companies (NBFCs) - such lenders are referred to as Member Lending Institutions (MLIs)

Limits: Up to 20% of the borrower’s total outstanding credit. Additional credit under the scheme to be capped at Rs. 5 crore.

Type of Borrower: Eligible MSMEs including business enterprises constituted as Proprietorships, Partnerships, Companies, Trusts, LLPs, and borrowers under PMMY.

Tenure: 4 years from date of disbursement

Moratorium: 1 year on the principal amount where interest is payable - Principal to be repaid in 36 months after moratorium

Guarantee/Collateral: 100% guarantee by National Credit Guarantee Trustee Company (NCGTC); no additional collateral to be given

Pre-Approved Loan: An offer will go out from the MLI to the eligible borrowers for a pre-approved loan which the borrower may choose to accept. If the MSME accepts the offer, it will be required to complete requisite documentation. An ‘opt-out’ option will be provided to eligible borrowers

Period of Disbursement: Applicable to all loans sanctioned under GECL from 23-May-20 to 31-Oct-20 up to a total sanctioned amount of Rs. 3 lakh crore

No. of Lenders: In case a borrower has existing limits with multiple lenders, GECL may be availed either through one lender or multiple lenders

Eligibility Criteria

(i) Outstanding as on 29-Feb-20: MSME borrower accounts with combined outstanding loans across all MLI's of up to Rs. 25 crore

(ii) Turnover: Annual sales turnover of up to Rs. 100 crore in FY 2019-20

(iii) Existing Customer of Lender Bank: Borrower should be an existing customers of MLI

(iv) Non NPA Account: Borrower accounts should be classified as Regular, SMA-0 or SMA-1

(v) GST Registration: Borrower must be GST registered, if mandatory for it to register

Interest Rates

- For Banks and FIs, lending rate linked to one of the benchmark rates by RBI +1%
- The interest rate from Banks to not exceed 9.25% p.a.
- For NBFCs, the interest rate shall not exceed 14% p.a.
- No additional processing fee shall be charged
- No penal interest for prepayment