A Complete Guide on How to Claim a Fixed Deposit After Account Holder’s Death

In this guide, we'll walk you through the steps to claim a fixed deposit after an account holder's demise—covering various scenarios, including nominations, joint accounts, and more complex cases like missing persons or non-resident accounts. With the right knowledge, you can avoid legal complications and ensure a seamless claim process during a challenging time.

What Happens to FD After Account Holder's Death?

After the account holder's death, the FD generally continues until the chosen tenure, with interest continuing as per the terms applicable when the FD was booked. If a regular interest payout was selected, the interest may continue to be credited to the linked account. If a cumulative option was selected, the interest will accumulate as per the FD's terms until maturity. Once the FD matures, the bank settles the proceeds with:

• The nominee
• In the absence of a nominee, the legal heir
• For joint FDs, the surviving joint account holder, as applicable

Importance of Nomination in Fixed Deposits

A nomination simplifies the claim settlement process significantly. Here's what you should know:

• Nomination Registration: Account holders can nominate up to four individuals for their FD accounts. You can choose either simultaneous nomination or successive nomination. 
  
  With simultaneous nomination, you can specify the percentage of the deposit each nominee will receive. For example, if you nominate your wife, sister and mother, you can assign 30% to your wife, 30% to your sister and 40% to your mother. The percentages can be divided as you choose, but they must add up to 100%. 
  
  With successive nomination, you need to specify the order in which the nominees become eligible to claim the deposit. For example, if your wife is the first nominee and your son is the second, your wife can claim the deposit after your death. If your wife is no longer alive, your son, as the next nominee, can claim it.
• Flexibility: Account holders can modify, change, or cancel nominations at any time.
• Minor Nominees: If the nominee is a minor, the account holder must appoint a guardian to receive the funds on the minor's behalf in case of the account holder's death. If no guardian is appointed, the bank may not be able to release the funds directly to the minor and require additional legal procedures or documentation. Once the minor turns 18, he/she needs to submit updated KYC and other necessary documents for the bank to credit the eligible FD maturity proceeds to the now-major nominee's account.
• Benefits of Nomination: The nominee ensures that funds are transferred quickly, bypassing lengthy legal procedures.

Claim Settlement Process

1. How to Claim FD With a Nomination

If a valid nomination is registered, the claim process is straightforward when one nominee is appointed. If multiple nominees are appointed, the FD maturity proceeds are distributed as per the nomination type selected.

Submit Required Documents:

• Death certificate of the account holder (verified against the original).
• Valid identity proof of the nominee(s).
• A completed claim application form.

Verification by Bank: 

• The bank verifies the documents and the nomination details.
• The bank also ensures that there is no court order restricting the release of the funds.

Settlement:

• The eligible nominee(s) receive the FD proceeds (principal + interest).
• For simultaneous nominations, the proceeds are settled according to the percentage specified for each nominee.
• For successive nominations, the proceeds are settled with the nominee who is eligible according to the specified order.

2. How to Claim FD Without a Nomination

In the absence of a nomination, legal heirs must follow these steps:

Provide Documentation: 

• Death certificate (verified against the original).
• Proof of relationship with the deceased (Legal Heirship Certificate, Family Tree Certificate, or similar).
• A claim application form.
• Indemnity bond signed by legal heirs and two sureties, if applicable.

Additional Verification: 

Depending on the claim amount, the bank may require: 

• Succession Certificate or Probate (for disputes or high-value claims).
• Sureties with adequate net worth.

Claim Approval: 

• Upon document verification, the bank settles the claim via demand draft or account credit.
• Legal heirs may jointly authorize payment to one claimant with a consent letter (Annexure VIII).

Special Scenarios

1. Joint Accounts

For joint accounts, survivorship clauses such as "Either or Survivor" allow surviving account holders to access funds without additional documentation. However, joint FDs require explicit consent from all holders for premature closure or changes.

2. Missing Persons

If the account holder is missing for over seven years, their death can be presumed under Section 108 of the Indian Evidence Act. Claimants must provide:

• A certified copy of the FIR and final police report.
• Indemnity bond with sureties (for claims up to ₹1 lakh).

3. Non-Resident Accounts

Claim and nomination rules also cover NRE and NRO deposits held by non-residents. Read the details for fixed deposits for NRIs.

• NRO FD: If the claimant is a resident Indian, the proceeds are credited to their domestic account. If the claimant is an NRI, the proceeds are credited to their NRO account.
• NRE FD: If the claimant is a resident Indian, the proceeds are credited to their domestic account. If the claimant is an NRI, the proceeds remain freely repatriable and can be credited to their NRE or NRO account, as applicable.
• FCNR Deposit: If the claimant is a resident Indian, the proceeds are converted into Indian rupees and credited to their domestic account. If the claimant is an NRI, the proceeds can be transferred to their NRI or foreign account, as applicable. Where permitted, the bank may also credit the proceeds to an RFC account if the claimant intends to continue holding the funds in foreign currency.

Time Frame for Fixed Deposit Settlement

The Reserve Bank of India mandates banks to settle claims within 15 days of receiving the necessary documents, provided all requirements are met.

Interest Payments on Deceased Accounts

1. Savings Accounts: Standard savings account interest applies until the claim is settled.

2. Fixed Deposits:

• Interest is paid at the contracted rate until maturity.
• For premature withdrawals, no penalty is imposed.
• Claims made post-maturity are settled with applicable interest.

Responsibility of the Bank

1. Flagging Accounts: Upon receiving intimation of death, banks freeze withdrawals and allow only credit transactions.

2. Pipeline Flows: 

• Claimants can authorise the bank to open an "Estate of the Deceased" account to manage incoming credits.
• Alternatively, the bank can return such credits to the remitter.

Simplified Procedures for Quick FD Claim Settlement

To expedite the process, banks may offer:

• Digital platforms for claim tracking.
• Partial settlements based on alternate death documentation during emergencies (e.g., pandemics).

RBI's Simplified Process to Claim FD for Missing Person/Account Holder

To alleviate undue hardship for individuals, the RBI has recommended that banks adopt a simplified procedure for settling claims up to a specified threshold limit (determined by each bank), taking into account the associated risks. Obtaining a court order for the presumption of death can be costly and time-consuming, particularly when the account balance of a missing person is not substantial. To prevent additional strain on claimants, the bank has set a threshold limit of ₹100,000 (Rupees One Lakh Only) for such claims.

For claims involving credit balances of up to ₹100,000 and cases where the account holder has been missing for seven years or more, the bank will consider settling claims from nominees or legal heirs by obtaining the following documents:

1. Certified copy of the First Information Report (FIR) filed with the police.
2. Certified copy of the Final Report from the police stating that the account holder is untraceable.
3. A Letter of Indemnity, jointly signed by the nominee/legal heirs and two sureties, whose net worth is at least equal to the claim amount. This will serve as a substitute for the Letter of Indemnity specified in the bank's "Policy on Settlement of Claims in respect of Deceased Account Holders," applicable for claims of up to ₹100,000 for missing persons.

Key points to remember:

• The FIR must be filed within the jurisdiction where the account holder lived or had their permanent residence in the year prior to their disappearance.
• The FIR must clearly state that the account holder is missing.
• The FIR must be filed by someone who would reasonably have heard from the account holder if they were still alive.
• The disappearance date is considered from the date the FIR is filed.

The ₹100,000 limit is calculated by including the total balance across all accounts of the missing person, along with any accrued interest.

General Guidelines:

• For claims exceeding ₹100,000, claimants must provide a true copy of a court order from a competent legal authority. A certified copy should be presented for verification, which will be returned after confirmation.

For cases involving account holders missing due to natural calamities or national disasters, the usual documentation process may be waived. In such instances, claims should be settled with approval from both the Legal and Service Quality Departments at the bank's corporate office.

How to Change FD Nomination

You can change your FD nomination by submitting the applicable nomination form at the bank branch, through the net banking portal, or through mobile banking.

The different bank nomination forms include:

• To make a new nomination: Submit Form DA-1 (Multiple Nomination Form).
• To cancel an existing nomination: Submit Form DA-2.
• To change an existing nomination: Submit Form DA-3 — for example, to replace nominees, change their order, or modify their assigned share.

How to Know the Maturity Value of a Deceased Person's FD?

If the FD is still active and has not matured, know your FD's maturity value by:

• Contacting the bank.
• Using internet banking, if you have authorised access to the deceased person's account.
• Checking the FD documents, if available.
• Using an FD calculator to estimate the maturity value based on the tenure, principal amount and applicable interest rate.

The final maturity value may change in cases such as premature or partial withdrawal, or TDS deduction, if applicable.