Indemnity by a us citizen-indian law
ASIM
(Querist) 15 May 2014
This query is : Resolved
Sir, my query is whether indemnity by a US Citizen will have any applicability in Indian courts? After demise of my Uncle (Indian Citizen-Died in N.Delhi) in year 2013, his two sons(born in India and US Citizens for the past 20 years ) are his only surviving family members. My Uncle had a SB A/C with a Bank at Delhi. How can they claim this amount from the Bank? In case of legal heirs being Indian citizen, Bank is ready to give to such heirs on an Indemnity by such heirs. However, Bank says that only Succession Certificate by an Indian Court will now decide who gets the money. Is the Bank correct? Whether Indemnity By US Citizen will not be binding on Bank in this case?
Respected Experts, please help and guide me ?
ajay sethi
(Expert) 15 May 2014
In the absence of nomination or clear mandate in respect of a joint account or a will left behind by the deceased depositor, banks are required to pay the stock (balance outstanding) at the time of death of the person to all the legal heirs. Considering the risk involved, banks traditionally used to look for legal representation (in the form of a succession certificate, letter of administration or probate) for settlement of claims.
Reserve Bank of India vide circular No. DBOD.No.Leg.BC.95 /09.07.005/2004-05 dated 9th June, 2005 have issued detailed guidelines for evolving simplified procedure for settlement of claims in respect of deceased depositors
ajay sethi
(Expert) 15 May 2014
I. Documentation
Documents which are required to be submitted along with the claim form:
1. Proof of death of depositor(s) or hirer(s).
2. Proof of identification of nominee(s) wherever applicable such as Ration Card, Election ID Card, PAN Card or Passport or any other satisfactory proof of identification acceptable to the bank or proof of authority of legal heir(s) wherever applicable.
(a) Member Bank should exercise due care and caution in ascertaining the identity of the survivor(s)/nominee and the fact of death of the account holder, through appropriate documentary evidence;
(b) It should be made clear to the survivor(s)/nominee that he / they would be receiving the payment from the member bank as a trustee of the legal heirs of the deceased depositor, i.e., such payment to him / them shall not affect the right or claim which any person may have against the survivor(s)/nominee to whom the payment is made.
(c) It may be noted that since payment made to the survivor(s) / nominee, subject to the foregoing conditions, would constitute a full discharge of the bank's liability, insistence on production of legal representation in such cases is superfluous and unwarranted and it would only serve to cause avoidable inconvenience to the survivor(s)/nominee. In such case, therefore, while making payment to the survivor(s)/nominee of the deceased depositor, the member bank should not insist on production of succession certificate, letter of administration or probate, etc., or obtain any bond of indemnity or surety from the survivor(s)/nominee, irrespective of the amount standing to the credit of the deceased account holder.
ajay sethi
(Expert) 15 May 2014
. Time Norms for settlement of claims
Member Bank will settle the claims in respect of deceased depositors and release payments to survivor(s) / nominee in case of accounts with survivor / nominee within a period not exceeding 15 days from the date of receipt of the claim subject to the production of proof of death of the depositor and suitable identification of the claimant(s) to the member bank's satisfaction. In the case of accounts without survivor / nominee clause the claim should be settled within 1 month from the date on which the requisite documents have been submitted.
Sankaranarayanan
(Expert) 15 May 2014
No more details need for your query, already mr sethi given his maximum
Rajendra K Goyal
(Expert) 15 May 2014
Bank is not agreeing to accept indemnity from US citizen, in turn it should accept indemnity from two acceptable indemnification who are Indian citizens in addition to indemnity from US citizens.
It can solve the purpose of Bank.
If Bank does not agree, succession certificate has to be obtained.
ASIM
(Querist) 15 May 2014
Respected Sri Ajay Sethi & Sri S Narayanan : Many Thanks for your Response and info given. Given the amount involved, and RBI Guidelines as well as Bank's policy, in absence of legal representation (will/succession certificate), legal heirs will have to give indemnity to Bank against any claim which may be made against it in future. But one basic questions remains : Whether the Bank is right in refusing indemnity by legal heirs who are US Citizens now? Will they have to file a case for succession certificate in Indian Courts ? Please enlighten me. Regards
Kumar Doab
(Expert) 15 May 2014
>>> If the nomination was made by the deceased SB a/c holder bank can not decline to make the payment to nominee.
IN such a case bank can not ask for indemnity.
Bank shall and bank can ask for KYC docs of nominee.
RBI / 2009-10 / 57
DBOD.No.Leg. BC.9 /09.07.006/2009-10 July 1, 2009
Master Circular on Customer Service
19.Nomination Facility
20. Settlement of claims in respect of deceased depositors
Simplification of procedure.
20.1 Accounts with survivor/nominee clause :
20.1.2. It may be noted that since payment made to the survivor(s) / nominee, subject to the foregoing conditions, would constitute a full discharge of the bank's liability, insistence on production of legal representation is superfluous and unwarranted and only serves to cause entirely avoidable inconvenience to the survivor(s) / nominee and would, therefore, invite serious supervisory disapproval.
20.2 Accounts without the survivor / nominee clause
20.6 Time limit for settlement of claims
>>> If the nomination was not made by the deceased SB a/c holder and the funds in the SB a/c are within the min. threshold limit set by board of the bank can ask for indemnity by the legal heir and witness from preferably some a/c holder of the bank.
If the funds in the SB a/c are above the min. threshold limit set by board of the bank can ask for succession certificate from jurisdictional court of law.
The legal heir can mandate a person to receive the payment.
The indemnity as per common sense too shall be signed by the person receiving the payment.
The policies in this regard are available on the website of RBI, BCSBI,IBA, have to be placed by bank on its website, in branch and a printed version has to be supplied to legal heir without any cost.
The legal heir may write to BM, Circle head, Nodal officer, MD, Chairman the contact details should be available on website of the bank.
Time limit for settlement of claims is 15 days hence BM/Bank shall certainly reply within 15 days.
Legal heir may insist on written reply by redg. post /email from official email id of the bank.
IN case there are gaps BM/Bank shall seek legal opinion and respond.
The bank may agree for indemnity routed thru Indian Embassy.
The legal heir can pursue thru RTI route with RBI, Bank.
The guidelines of RBI have statutory force and bank can’t violate.
ajay sethi
(Expert) 15 May 2014
what is the amount involved? if the funds in the a/c are above the min. threshold limit set by board of the bank can ask for succession certificate from jurisdictional court of law.
you can draw attention to the circular that the member bank should not insist on production of succession certificate, letter of administration or probate, etc., or obtain any bond of indemnity or surety from the survivor(s)/nominee, irrespective of the amount standing to the credit of the deceased account holder.
ASIM
(Querist) 16 May 2014
But one basic questions remains : Whether the Bank is right in refusing indemnity by legal heirs who are US Citizens now? If yes, there is no option but to file for Succession Certificate.... Please enlighten me. Regards
ASIM
(Querist) 16 May 2014
The amount involved is Rs18.23 lakhs as on Mar2014 plus interest..
Kumar Doab
(Expert) 17 May 2014
Even for big bank like SBI the limit is as low as Rs.10000/-
You may check it for your bank.
You have not clarified the nomination form was signed or not?
If it was not registered in a/c and duly acknowledged copy is available you might be in apposition to agitate since the lapse is at the end of BM/Bank/banker, and non payment in such a case would be a transgression by BM/Bank/banker.
Regulatory guidelines stipulate that each new account/ locker needs to be nominated. However if an account / locker holder does not wish to register a nomination on his account/ locker, the customer needs to explain the reasons for not registering a nomination to the Bank in writing. This letter will need to be signed by all the account / locker holders. In case the customer refuses to provide the explanation, the Bank needs to annotate the account opening / locker forms accordingly.
The bank might have cited indemnity from Indian so as to have someone within the ambit of Indian Laws.
If the legal heirs are US citizens now then the legal Heir that are now US citizens shall sign the indemnity.
The bank may ask for surety from Indian of equivalent value.
The option is either to agree for a way out suitable to both parties or go for succession certificate.
