A Deceased Depositor, No Nomination, and Three Claimants
A 68-year-old savings account holder of a cooperative bank branch dies in September, leaving ₹18.40 lakh in savings and a ₹5 lakh fixed deposit held jointly with his elder son under an 'either or survivor' mandate. No nomination was registered for the savings account. In October the elder son submits a claim form with a death certificate, the passbook and an indemnity, and asks for the entire savings balance. In November the daughter submits a separate claim, stating that a 'family settlement' on ₹100 stamp paper signed by the younger son gives her half the savings balance; the elder son disputes it. The deceased also had a standing instruction of ₹15,000 per month to a chit fund and a ₹2.2 lakh gold loan outstanding at the same branch. The daughter has now written to the branch complaining of delay and threatening to approach the RBI Ombudsman.
1. Explain the bank's legal position on each of the three items: the savings balance, the joint fixed deposit and the gold loan.
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Savings account (₹18.40 lakh, no nomination). Nomination is a facility that lets the bank discharge its liability without probing succession. With no nomination, the bank must deal with the legal heirs, and it must be satisfied that it is paying the right persons. A ₹100 stamp-paper 'family settlement' is not a registered instrument, does not bind the daughter, and is not a succession certificate. Paying the elder son alone on his indemnity, when a rival claim is already on record, would expose the bank to a second suit and to a regulatory finding of negligence.
Joint fixed deposit (₹5 lakh, either or survivor). The survivor mandate governs. On the death certificate and a claim from the elder son, the bank may pay him; the amount does not fall into the deceased's estate for the bank's purposes (succession law between heirs is a separate matter). Record the death, stop any standing instruction on that deposit, and note that survivor payment is not a distribution of inheritance.
Gold loan (₹2.2 lakh). The loan is a liability of the deceased's estate, and the bank has a right of set-off against deposits held in the same capacity. The branch should not release the gold or the savings without accounting for the dues. It should also check for a locker, other accounts and any guarantee the deceased had given.
2. What settlement process should the branch follow, and can it use a board-approved delegation limit to avoid demanding a succession certificate?
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Process. Acknowledge both claims in writing, open a claim file with a checklist, verify the death certificate, verify heirship documents (family tree, ration card, ID), and freeze operations except for credits. Stop the chit-fund standing instruction immediately. Then choose the route:
- Board-approved delegation: many cooperative banks permit settlement up to a specified limit against a joint affidavit, indemnity and no-objection from all heirs. This can be used only if all claimants sign. Here the elder son and the daughter are in dispute, so the condition fails.
- Succession certificate or probate from a competent court, or a registered family settlement signed by all heirs. Given ₹18.40 lakh and an active dispute, this is the safer route.
The bank should not pick a winner between siblings. It can also ask all three heirs to nominate one authorised recipient, with a written mandate from the others. Set-off of the gold loan should be documented and communicated to all claimants so that the remaining distributable amount is transparent.
Remember that the bank's liability is to pay the correct heirs; delay caused by a genuine dispute is defensible, but delay caused by the branch losing the file is not.
3. How should the branch respond to the daughter's complaint and the Ombudsman threat?
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Respond in writing, within the bank's service timeline, with facts rather than assurances:
- Acknowledge the claim and the delay in a letter, and give a named single point of contact.
- Explain the reason precisely: the bank has two conflicting claims and no nomination, so it cannot pay one claimant without exposing itself to the other. Cite the documents needed - succession certificate or a registered settlement signed by all heirs - not a vague 'legal formalities'.
- Apologise for the part that is the bank's fault: if the October claim sat unattended for weeks, say so and fix accountability internally. Do not apologise for insisting on a legally correct settlement.
- Do not disclose the deceased's account details to one claimant beyond what that claimant is entitled to know, and do not take sides in family allegations.
- Prepare the Ombudsman file now: claim forms, dates of receipt, correspondence, the checklist issued and the legal basis. Grounds of complaint often narrow to delay and communication, and a documented, reasoned file is the best defence.
- Offer a practical path: a joint meeting with all heirs, or a mandate authorising one recipient.
The judgement being tested is that customer service and legal caution are not opposites; the failure here is silence, not insistence on due process.