RBI's New Rules: Banks must settle deceased customers' claims in 15 days or pay compensation

Under the 'Reserve Bank of India (Settlement of Claims in respect of Deceased Customers of Banks) Directions, 2025', all commercial and cooperative banks must implement these rules by March 31, 2026.

According to the new norms, banks are required to settle claims related to deposit accounts, safe deposit lockers, and items in safe custody within 15 calendar days of receiving all necessary documents. This move addresses varying settlement practices across banks, making it easier for nominees or legal heirs to access funds or assets without prolonged delays.

For deposit accounts with a nominee or survivorship clause, banks must release payments to the designated person, providing a valid discharge of liability. In cases without a nominee and where the claim amount is below the threshold Rs 15 lakh for commercial banks and Rs 5 lakh for cooperative banks a simplified procedure applies, potentially requiring minimal documentation. Higher amounts may need additional papers like a succession certificate.

Delays will attract compensation: For account claims, banks must pay interest at the prevailing Bank Rate plus 4% per annum on the outstanding amount for the delay period. For lockers or safe custody items, a flat Rs 5,000 per day penalty applies if timelines are missed. Banks must also notify claimants of any delays and reasons.

These guidelines do not cover government savings schemes like the Public Provident Fund (PPF) or Senior Citizen Savings Scheme (SCSS), which follow their own rules.

Experts hail this as a customer-friendly reform, reducing bureaucratic hurdles during grief. "It ensures timely justice and holds banks accountable," said a banking analyst. With India's aging population, such measures could benefit millions, promoting better financial inclusion and trust in the banking system.