Nominee vs Legal Heir: Who Gets a Bank Account’s Money After a Death, Under RBI’s 2025 Rules
Sunil Rao, a retired railway employee in Nagpur, died in July 2026 at 68. He left ₹9 lakh in a savings account where his wife Lata was the registered nominee, and a ₹12 lakh fixed deposit he had opened years earlier without naming anyone. His son Arun assumed the whole amount would simply go to his mother. The bank’s answer was different for each account, and the reason is the difference between a nominee and a legal heir.
This guide uses Sunil’s two accounts to explain nominee vs legal heir rights, the documents banks can ask for, the deadlines RBI now sets for deceased depositor claims, and the multiple-nominee rules in force since November 2025.
Nominee vs legal heir: who gets the money, and who owns it
A nominee is the person the bank pays. A legal heir is the person entitled to the money under the deceased’s will or, if there is no will, under the succession law that applies to the family. Often they are the same person. When they are not, the bank’s duty ends once it pays the nominee, and the heirs settle the rest among themselves.
RBI’s Settlement of Claims in respect of Deceased Customers of Banks Directions, 2025 make the point directly. Payment to a nominee is a valid discharge of the bank’s liability only if “it has been made clear in writing to the nominee(s)/ survivor(s) that they would be receiving the payment from the bank as a trustee of the legal heirs of the deceased depositor(s), i.e., such payment to them shall not affect the right or claim which any person may have against the nominee(s)/ survivor(s) to the extent of the payment made to them.”
For Lata, that means the bank will pay her the ₹9 lakh savings balance. If Sunil had left a will dividing everything equally among Lata, Arun and his daughter Kavya, Lata would hold that money for all three. The bank would not get involved in that division.
Claiming an account that has a nominee
Here RBI has removed most of the paperwork. The directions say a bank “shall not insist on production of legal documents such as Succession Certificate, Letter of Administration, Probate of Will, etc., or seek any bond of indemnity/ surety from the nominee(s)/ survivor(s)/ third-party, irrespective of the amount standing to the credit of the deceased account holder(s)”.
| What Lata submits for the ₹9 lakh savings account | Why |
|---|---|
| Claim form in the format in RBI’s Annex I-A | Standard form every bank must use |
| Sunil’s death certificate | Proof of death |
| Her own officially valid document (for example Aadhaar or passport) | Proof of her identity and address |
The same rule covers joint accounts with a survivorship clause such as “either or survivor”. If Sunil and Lata had held the savings account jointly that way, Lata would simply continue as the surviving holder. In a joint account, RBI notes, “the nominee’s right arises only after the death of all the depositors”.
Claiming an account without a nominee
The ₹12 lakh FD had no nominee and no will was found, so it goes to Sunil’s legal heirs: Lata, Arun and Kavya. For such claims, RBI requires banks to follow a simplified procedure where the total amount payable, including interest, is below a threshold. The threshold is ₹15 lakh for commercial banks and ₹5 lakh for co-operative banks. The simplified procedure applies only if there is no nomination, no will, no contesting claim and no court order stopping payment.
| Situation | Documents a commercial bank can ask for |
|---|---|
| Sunil’s ₹12 lakh FD (below ₹15 lakh, no nominee) | Claim form; death certificate; ID of claimants; indemnity bond signed by claimants; no-objection letters from heirs not claiming; a legal heir certificate or a declaration about the heirs by an independent person known to the family. No third-party surety. |
| If the FD were ₹18 lakh (above the threshold) | Succession certificate, or a legal heir certificate, or an affidavit about the heirs sworn before a notary or magistrate, plus the documents above. The bank may also ask for a surety bond. |
| If Sunil had left a will | Settlement on the basis of the will; probate or letters of administration where applicable |
In practice, the family chooses either to claim jointly or to have one heir claim while the others sign no-objection letters. If Arun and Kavya sign letters in Lata’s favour, the bank pays her the FD amount. Anyone who signs such a letter gives up the claim against the bank, so it is worth agreeing the division within the family first.
How long can the bank take?
RBI’s directions set firm deadlines. A bank “shall settle a claim in respect of deposit accounts of a deceased customer within a period not exceeding 15 calendar days from the date of receipt of all the required documents associated with the claim”. If it delays for reasons attributable to itself, it must pay interest at not less than the Bank Rate plus 4% a year on the amount due for the period of delay.
| Claim | Deadline after all documents are in | If the bank is late |
|---|---|---|
| Lata’s ₹9 lakh savings (nominee) | 15 calendar days | Interest at Bank Rate + 4% for the delay |
| Heirs’ ₹12 lakh FD (no nominee) | 15 calendar days | Interest at Bank Rate + 4% for the delay |
| A locker or safe-custody articles | 15 calendar days to process and fix a date for the inventory | ₹5,000 for each day of delay |
The clock starts only when the file is complete. Banks may offer online lodging of claims, and for those RBI requires an acknowledgement and online status tracking. At the branch, ask for a dated acknowledgement of your documents; it fixes the date from which any delay compensation is counted.
Up to four nominees since November 2025
The Banking Laws (Amendment) Act, 2025 changed nomination rules from 1 November 2025. According to the Finance Ministry’s release on the change, customers “may nominate up to four persons, either simultaneously or successively”. In a simultaneous nomination, each nominee gets a fixed share and the shares must add up to 100%. In a successive nomination, “the next nominee becomes operative only upon the death of the nominee placed higher”. For lockers and articles in safe custody, only successive nomination is allowed.
| How Sunil could have nominated the ₹12 lakh FD | What happens on his death |
|---|---|
| Simultaneous: Lata 50%, Arun 25%, Kavya 25% | Bank pays ₹6 lakh, ₹3 lakh and ₹3 lakh directly, without legal heir documents |
| Successive: Lata first, then Arun | Bank pays Lata the full amount; Arun is paid only if Lata has died before the claim |
| No nomination (what actually happened) | Heirs follow the simplified procedure above |
Banks must acknowledge a nomination, cancellation or change within three working days, and print “Nomination Registered” with the nominee’s name on the passbook, statement and FD receipt, under RBI’s October 2025 nomination directions. If your passbook does not show that legend, the nomination may not be on record.
What these rules do not cover
The 2025 claims directions exclude government savings schemes run through banks, such as PPF and the Senior Citizens’ Savings Scheme. Those follow their own scheme rules, which our PPF rules guide touches on. Insurance policies are also separate: a life insurance claim follows the insurer’s process and the Insurance Act, and our guide on term insurance cover explains why nominations there matter just as much.
Pensioners have one more document to keep current while alive. Family pension after a pensioner’s death is a separate claim made to the pension-paying authority, and a lapsed life certificate can stop pension credits before then; our guide to the Jeevan Pramaan life certificate covers the annual submission.
For your own accounts, check this week that every savings account, FD and locker shows “Nomination Registered” with the right names, consider splitting large deposits between nominees by percentage, and tell your family where the account details are kept. If you would like a deposit to pay out without paperwork, the nomination is what makes that possible.
FAQs
Can a nominee keep all the money if there is a will?
Not legally. The bank pays the nominee, but RBI’s rules say the nominee receives it “as a trustee of the legal heirs”. If the will or succession law gives others a share, they can claim it from the nominee.
Do I need a succession certificate to claim my father’s account?
Only in some cases. If there is a nominee, no. If there is no nominee and the total is below ₹15 lakh at a commercial bank (₹5 lakh at a co-operative bank), the simplified procedure applies. Above that, the bank can ask for a succession certificate, or accept a legal heir certificate or a sworn affidavit instead.
Can I change my nominee online?
Many banks allow it through net banking or the mobile app; others need a form at the branch. Either way, the bank must acknowledge the change within three working days.
What if the bank does not settle within 15 days?
First ask the branch for the reason in writing; RBI’s directions require the bank to communicate reasons for any delay. If the delay is the bank’s fault, it owes interest at the Bank Rate plus 4%. Unresolved complaints can go to the bank’s grievance cell and then to the RBI Ombudsman.
Disclaimer: This article explains RBI rules on deposit claims in general terms. Succession questions depend on your family’s personal law and documents; consult a lawyer for disputes.
