When you add a nominee to any of your savings or investment accounts, the idea is that the person will get the money when you pass away. But what if the nominee and the holder both pass away?In one such case the surviving family member had to face a long delay in getting money from his wife’s bank account.A woman had Rs 62,541 in her savings account. Her son was registered as the nominee. Both the mother and son passed away, leaving her 83-year-old husband as the only surviving member of the family. The man was a farmer and was not very familiar with English. Then began his ordeal to get the money.
What the case is about
The man approached the bank to find out how he could withdraw the money from his late wife’s savings account. The bank explained the documents that would be required, following which he submitted the relationship certificates and death certificates.On August 5, 2023, he also handed over the legal heir certificate that the bank had specifically asked for. However, the payment was not released at that stage because the branch manager said the bank would first have to obtain a legal opinion on the matter, according to an ET report.When there was still no progress after several days, the man sent the bank a registered letter on August 18, 2023. The bank subsequently informed him that additional documents were required. He submitted those documents as well, and the amount was finally credited to his bank account on September 4, 2023.Even though the money was eventually released, the man approached the consumer commission with a complaint against the bank. He alleged that the delay had forced him to make repeated visits to the branch and caused him financial hardship and mental agony.
Why did the man win compensation?
The consumer commission said banks are expected to deal with customers in a manner that is accessible and customer-friendly.Where a customer does not understand English, the bank should communicate with the person in the regional language so that the required procedures and developments are clearly understood.In this case, the commission criticised what it considered the bank’s overly technical approach, particularly given that he was an elderly farmer with limited knowledge of English and legal procedures.The consumer commission said a bank dealing with an elderly claimant cannot simply rely on a procedural or technical shortcoming and leave the customer to deal with it on their own. The bank is expected to identify the problem, explain it in a manner the claimant can understand and assist in correcting it.The commission also referred to the RBI’s 2005 charter, which states that communication between banks and their customers should be in English, Hindi or the relevant regional language.The consumer commission noted that the Reserve Bank of India, through several communications, has stressed the need for deceased-depositor claims to be settled through simple and hassle-free procedures. The RBI has also emphasised that the relevant forms and materials should be available in English, Hindi and the concerned regional language.The farmer won the case on August 31, 2026. The Ernakulam consumer commission directed the bank to pay him Rs 10,000 as compensation and a further Rs 5,000 towards litigation expenses.The bank’s main argument was that when the man went to the branch in May 2023 and submitted a request to have the money transferred, the application he submitted did not carry his signature.The consumer commission noted that the man was an elderly farmer who had approached the bank seeking access to a relatively small sum held in his late wife’s savings account.The commission said the bank was within its rights to verify the identity of the people making the claim and establish their entitlement to the deposit.The consumer commission said: “Prudential verification by a bank cannot by itself be characterised as deficiency in service.”At the same time, however, the commission made it clear that the need for verification could not be used to justify a process that was unclear, undocumented or placed an unnecessary burden on the claimant.According to the consumer commission, when a bank deals with the legal heirs of a deceased customer, it also has a responsibility to clearly explain what is required, provide the relevant forms, point out any deficiencies without delay and help the claimant complete the process within a reasonable timeframe.In this case, however, the bank did not produce the allegedly unsigned application before the commission. The commission considered this a significant gap in the evidence, and said the absence of the document weakened the credibility of the bank’s defence.Abhishek Bagga, Associate Partner at King Stubb & Kasiva told ET, the commission ruled in the man’s favour because it found that the bank had not dealt with his claim relating to his deceased wife’s savings account with the level of diligence and transparency expected of a regulated banking institution.The bank was justified in verifying the man’s entitlement after the nominee, his son, had also died. However, the bank could not establish that the delay had resulted from an allegedly unsigned application.It did not place before the commission the application itself, an acknowledgement, an inward record or any contemporaneous communication showing that the man had been asked to correct the alleged deficiency.The commission also took into account the man’s age and his inability to understand English. Bagga said this meant that the bank should have explained the procedural requirements to him in a language he could understand. Instead, he was required to make several visits and representations before the funds were ultimately released.
About The Author
