The nominee, the objection and the 'small consideration'
Ramesh Gupta, a retired schoolteacher, dies in October. His savings account holds ₹1.8 lakh, and a fixed deposit of ₹5 lakh has just auto-renewed for two years with no premature-withdrawal concession. The nomination registered in 2019 names his daughter Priya, who lives in Hyderabad; his son Ajay, who lived with him, disputes the nomination. The branch manager tells Priya on the phone that she must produce a succession certificate or probate, because 'there is a dispute', and that the process will take 'at least six months'. The bank's board-approved deceased-depositor policy allows settlement to a registered nominee up to ₹10 lakh on a simple claim form with a death certificate and KYC, without insisting on a succession certificate. Meanwhile, the account continues to attract SMS alert charges of ₹25 a quarter, and a premium of ₹1,850 for a personal accident policy was debited after the death. Priya says she cannot travel from Hyderabad. A junior clerk tells her that 'with a small consideration' he can move the file faster. Ajay has separately written to the branch objecting to any payment to Priya.
1. Is the branch manager's demand for a succession certificate correct? Explain the nominee's legal position, the bank's obligation, and how Ajay's objection should be handled.
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No - not on these facts.
- A nomination made under the Banking Regulation Act, 1949 (for deposits, Section 45ZA) entitles the bank to pay the nominee, and payment to the nominee gives the bank a valid discharge. The nominee receives the money subject to the law of succession - effectively for the benefit of those entitled - but the bank is not required to adjudicate the family dispute.
- The bank's own board-approved policy sets a ₹10 lakh threshold for simplified settlement. The savings balance of ₹1.8 lakh and the deposit of ₹5 lakh fall squarely inside it.
- A succession certificate or probate becomes relevant where there is no nomination, where the claim exceeds the board-approved limit, where the nomination is invalid, or where a court directs. A letter of objection from another heir is not a court order.
Handling Ajay: record his objection in the file, reply in writing that the bank will act on the registered nomination in accordance with its policy, and inform him that his remedy lies in civil proceedings between the heirs. If a court later stays payment, the bank must comply at once.
Why the manager's answer is itself an ethical failure: it transferred the bank's own decision onto a grieving family, imposed six months of delay on a modest sum, and - via the clerk's offer - created a market for 'speeding up' what should have been routine. Note separately that a locker nomination merely identifies a contact person; locker contents require the bank's inventory and succession process, and must not be released on the deposit nomination.
2. List the customer-service and conduct failures visible in the case, and name the customer rights or code obligations each one breaches.
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- Incorrect procedural advice. Telling Priya she needs a succession certificate contradicted the bank's own policy. Breach: right to transparency and right to fair treatment under the RBI Charter of Customer Rights.
- Unjustified delay. An open-ended six months for a ₹6.8 lakh claim is not a process, it is an obstacle. Breach: Fair Practices Code commitment on timely settlement, and the grievance-redressal right.
- Post-death debits. The customer's mandate ends on death. Continuing SMS charges of ₹25 a quarter and debiting ₹1,850 for a personal accident premium after death is unauthorised recovery, and the premium should not have been collected at all since the cover had lapsed. It must be reversed and the insurer informed.
- Solicitation of gratification. The clerk's 'small consideration' is misconduct under the code of conduct and potentially a criminal offence. It corrodes trust in the entire claim process, not just this file.
- Confidentiality and communication. Discussing a disputed claim with one heir on the phone, without a written record or a single point of contact, inflames the dispute and risks disclosure of account details.
- Absence of a bereavement process. No named officer, no checklist, no plain-language guidance - the family is left to navigate the bank's internal confusion.
Ethical thread: each lapse is small on its own; together they convert a routine settlement into an extortion opportunity.
3. Draft the corrective action the branch and the bank should complete within two weeks, and state how the clerk's offer should be handled.
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Within two weeks
- Stop the leakage. Reverse the ₹25 quarterly SMS charges and the ₹1,850 premium, write to the insurer cancelling the cover from the date of death, and confirm the reversal to Priya in writing.
- Settle the claim. Email and courier the simplified claim form to Priya, accept a digitally attested death certificate and video-KYC where policy permits, or route the claim through a branch near Hyderabad under the bank's any-branch facility. She should not have to travel for ₹6.8 lakh.
- Answer Ajay in writing, citing the nomination and the policy, with a copy to Priya, so that both heirs receive the same statement.
- Handle the locker separately under the locker policy with an inventory and the nominee treated as contact only.
- The clerk. Preserve the call records, initiate disciplinary proceedings under the code of conduct, and refer the gratification demand to the appropriate authority - this is a corruption allegation, not a training issue. 'Counselling' would signal that the bank prices integrity cheaply.
- Root cause. Retrain branch staff on the deceased-depositor policy, publish a plain-language claim checklist, and run a sample audit of dormant and deceased accounts for charges debited after death.
Principle applied: the bank's duty is to make the lawful process easy and the unlawful shortcut impossible - not to make the family pay for the bank's own procedural confusion.