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

Losing a loved one is never easy, and during such a difficult time, dealing with financial matters can add further stress to the situation. One such concern is the process of claiming funds from a Fixed Deposit (FD) account after the account holder’s death. Whether there is a nominee or not, understanding the claim procedure can make a significant difference in how smoothly the funds are accessed by the rightful beneficiaries.

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.

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 name one individual as the nominee for their FD accounts. This allows the bank to release funds directly to the nominee after the account holder's demise.
• 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 their behalf in case of death.
• 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 nominee is registered, the claim process is straightforward:

Submit Required Documents:

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

Verification by Bank: 

• The bank verifies the documents and ensures no court order restricts the release of funds.

Settlement:

• The funds, including accrued interest, are paid to the nominee via demand draft or account credit.
• The nominee must provide a signed receipt for the amount.

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

For non-resident accounts:

• Funds are converted into domestic deposits if the claimant is a resident.
• Nominees residing abroad can receive funds via their Non-Resident Ordinary (NRO) accounts.

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 Fixed Deposit Nomination?

If you wish to change your FD nomination, you can do so by submitting Form DA-2 Cancellation of Nomination. You can obtain the same at the bank branch.