RBI Mandates 15-Day Deadline and Compensation for Deceased Customer Claims: A New Era of Financial Accountability

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New Delhi — In a landmark development set to dramatically improve customer experience in the banking sector, the Reserve Bank of India (RBI) has issued comprehensive and stringent guidelines for the settlement of claims related to deceased customers. The new rules, titled the ‘Reserve Bank of India (Settlement of Claims in respect of Deceased Customers of Banks) Directions, 2025,’ introduce a mandatory 15-calendar-day timeframe for banks to settle claims and prescribe significant compensation for any institutional delays. This crucial move, as reported by mfnewsdaily.in, aims to standardise divergent banking practices and alleviate the significant hardship faced by bereaved families.

The directions require all banks to implement the revised instructions as expeditiously as possible, with a hard deadline of March 31, 2026.

A Strict 15-Day Timeline for Claim Settlement

The central pillar of the new framework is the imposition of strict time limits, fundamentally changing the accountability of banks:

Deposit Accounts: A bank must settle a claim in respect of a deceased customer’s deposit accounts within a period not exceeding 15 calendar days from the date of receipt of all the required documentation associated with the claim.
Safe Deposit Lockers/Safe Custody Articles: For safe deposit lockers and articles kept in safe custody, the bank must, within the same 15-calendar-day limit of receiving all necessary documents, process the claim and communicate with the claimant(s) to fix a date for making an inventory of the contents.

This shift from ambiguous ‘expeditious settlement’ clauses to a concrete, measurable deadline represents a major victory for consumer rights and financial clarity.

Mandatory Compensation: Banks Must Pay for Delays

Perhaps the most impactful provision is the introduction of mandatory compensation for delays, ensuring financial repercussions for banks that fail to adhere to the mandated timelines. This measure is intended to act as a powerful deterrent against bureaucratic inertia.

For Deposit-Related Claims: If a deposit claim is not settled within the 15-day period due to reasons attributable to the bank, the institution shall pay compensation in the form of interest. This interest rate must be at a rate not less than the prevailing Bank Rate + $4%$ per annum on the settlement amount due for the period of delay.
For Locker/Safe Custody Claims: For claims related to safe deposit locker or articles in safe custody where the bank does not adhere to the 15-day timeline, it will be required to pay compensation to the claimant(s) at the rate of $₹ 5, 000$ for each day of delay.

In all cases of delay, the bank is also required to communicate the reasons for such delay to the claimant(s).

Simplified and Standardised Procedures

The RBI noted that many banks followed divergent and complex documentation practices, causing unnecessary friction. The new directions address this by standardising procedures:

Nominated Accounts: Where a depositor has made a nomination or the account operates with a survivorship clause, the payment to the nominee(s)/survivor(s) will be considered a valid discharge of the bank’s liability. The bank shall not insist on production of legal documents like a Succession Certificate or indemnity bonds, regardless of the amount. The key is establishing the identity of the claimant and the fact of the depositor’s death.
Accounts Without Nomination (Simplified Procedure): In the absence of a nominee or survivorship clause, banks must adopt a simplified procedure for settlement in cases where the aggregate amount payable is less than a predetermined threshold limit. This limit has been set at $₹ 5$ lakh for a co-operative bank and $₹ 15$ lakh for any other bank, or such higher limit as the bank may fix.
Claims Above the Threshold: For amounts exceeding the threshold limit, the bank may ask for additional legal documents like a succession certificate or a legal heir certificate. Crucially, the directions have been designed to streamline even these procedures to reduce the typical delays associated with legal documentation.

Context and Future Impact

The issuance of the ‘Reserve Bank of India (Settlement of Claims in respect of Deceased Customers of Banks) Directions, 2025’ represents a firm commitment by the regulator to prioritise consumer protection and financial inclusion. The move is expected to significantly reduce the volume of unclaimed deposits, which often accumulate because of the complex and protracted settlement procedures that discourage legal heirs from pursuing the claim.

By standardising documentation, imposing strict deadlines, and enforcing steep financial penalties for institutional failure, the RBI is placing the onus of efficiency squarely on the banks. This shift is not merely procedural; it reflects a broader change in the regulatory philosophy, aiming for a banking system that is not only robust but also acutely sensitive to the needs and vulnerabilities of its customers. This development heralds a significant improvement in the quality of customer service across the entire Indian financial landscape.