A nominee of a checking account—financial savings or fastened deposit— is liable to obtain proceeds from the stated account on the demise of the account holder. This is as per the laws of the Reserve Bank of India (RBI). Yet, not all banks implement this rule in true spirit and so nominees or authorized heirs of account holders face quite a few challenges throughout dying declare processing. This is true of some massive banks, the place every of the branches are depending on the foundations adopted by the zonal and regional workplaces in blatant violation of RBI pointers.
At such branches, the officers involved demand irrelevant paperwork, claiming that it’s in accordance with directions despatched by the lender’s authorized division. Branch officers select not to reply to emails or letters which quote RBI pointers and even their very own insurance policies (as hosted on their web site). With inner grievance cells missing independence and effectiveness; a lukewarm assist underneath Integrated Ombudsman Scheme 2021 appears to be extra of a compliance requirement leading to pointless harassment of account holders and their nominees.
Such was the case with Pawar, who didn’t need to disclose her first title—was the nominee of her son’s financial savings checking account with a personal sector financial institution (at Sri Ganganagar). After her son’s dying, the financial institution refused to simply accept her declare software, citing that the nominee ought to acquire no objection certificates from two firms— her son was a certified signatory at one the businesses and a accomplice on the different. Both these entities additionally had present accounts with the identical department of the financial institution and had been debt free. When her declare was rejected, Pawar, a retired banker, threw the rule e-book at them on the relevance of nomination and immunity from the 2 accounts owned by impartial entities. The department supervisor, nevertheless, refused to get right into a dialogue, whereas the zonal and regional heads refused to satisfy the nominee or settle for illustration letters. Her declare is pending for greater than six months now.
In one other case, Lima—who too didn’t need to disclose her full title—was the nominee of her mom’s financial savings checking account and a few fastened deposits with a number one public sector financial institution. Her mom suffered a cardiac arrest and died when she came over her within the US in 2021. Her certificates of dying was issued by the division of well being and psychological hygiene metropolis of New York. Lima visited India in February this yr and submitted a dying declare. The financial savings account had periodic ECS transactions and was operative. The financial institution refused to simply accept the declare and demanded that the dying certificates be adjudicated within the US after which notarized. This stipulation, as per the financial institution’s personal web site, is relevant solely to non-residential exterior (NRE) or non- resident unusual (NRO) account holders who die abroad.
Accordingly, Lima then submitted the dying certificates, which, too, was refused by the financial institution in violation of the mannequin operational process (MOP) adopted by its board of administrators, and in opposition to the mannequin buyer rights coverage formulated by Indian Banking Association (IBA). The financial institution’s customer support remained a mute spectator and its authorized division opted to not reply to any letters or submissions. A plea to the chairman and impartial board members stating {that a} resident account owned by a resident Indian can’t be topic to guidelines relevant to non-resident accounts didn’t heed any response. The financial institution additionally didn’t acknowledge a duplicate of return of revenue filed by Lima’s authorized consultant on the earnings and a duplicate of revenue tax returns of the deceased in India. Sadly, the financial institution adopted its personal interpretation of deciding the residential standing of a deceased account holder and never as per Fema or revenue tax Act.
Lima additionally confronted an identical downside with one other public sector financial institution. Here although, her mom had two separate accounts in two completely different branches of this financial institution. While one department accepted the dying certificates (duly notarized in India) and processed the declare, one other department (situated barely 2km away) initially refused to simply accept the certificates. When questioned concerning the differential therapy at two completely different branches of the identical financial institution, the lender quietly settled the declare.
Many banks, in utter disregard of RBI notifications, proceed to harass nominees and authorized heirs and attempt to deprive them of what’s rightfully theirs. The regulatory regime lacks sufficient mechanism to forestall such occurrences, maybe as a consequence of lack of accountability and levy of penalties.
Rajat Dutta is founder & initiator, Inheritance Needs Services Pvt. Ltd
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Updated: 07 Aug 2023, 10:49 PM IST
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