How to close a bank account after a death

The first task is not paperwork but inventory. Working through one institution at a time, discovering a requirement, going away to satisfy it and coming back is what makes this process take a year rather than a season.

Assemble a list of every account, deposit, policy, folio and fund in the deceased's name. Useful sources are the last few years of income tax returns and Form 26AS or the annual information statement, which show interest paid and tax deducted by institution; bank passbooks and statements; the deceased's email for account statements; cheque books; and any list of investments they kept.

Note for each account whether a nomination was registered and whether there is a joint holder, because that single fact determines which of three quite different routes you are on. The nomination status is printed on most passbooks and statements and is visible in net banking.

Obtain multiple certified copies of the death certificate at the same time. Every institution retains the copy you hand over, and the marginal cost of extra copies at the outset is trivial compared with going back to the registrar repeatedly.

Where an account has been inactive for a long period, the balance may no longer be with the bank at all. Deposits unclaimed beyond a prescribed period are transferred to a central fund, and there is a central search facility for tracing them. If a branch says it has no record of an account you know existed, ask specifically whether the balance has been transferred as an unclaimed deposit rather than accepting that the account does not exist.

Do not close anything before you have mapped the standing instructions. Salary credits, pension credits, insurance premium debits, utility auto-debits and loan EMIs may all be routed through the account, and closing it abruptly can cause a policy to lapse or a loan to fall into default. Redirect first, close second.

Route one is a registered nominee. Where a valid nomination exists on an account, deposit or locker, the bank pays the nominee on production of the death certificate and its claim form. The regulator's position is that banks should adopt a simple procedure with minimum documentation and should not insist on a succession certificate, letter of administration, probate or indemnity bond, irrespective of the amount. If a branch demands one anyway, that demand is the thing to escalate, not the claim.

Route two is survivorship. Where the account is held jointly with an 'either or survivor' or 'former or survivor' mandate, the surviving holder may continue to operate the account after producing the death certificate. The bank updates its records and the account continues; there is no settlement process as such. Where the mandate is 'jointly' rather than 'either or survivor', survivorship does not apply and you fall back to the other routes.

Route three is neither. Where there is no nominee and no surviving joint holder, the bank falls back on its own deceased-claim settlement policy. Banks are expected to have such a policy, approved by their board, which fixes a threshold below which claims are settled without insisting on legal representation — typically against a claim form, the death certificate, proof of the claimant's identity and relationship, an indemnity, and sometimes a surety or letters of disclaimer from the other heirs.

Only above that board-fixed threshold does legal representation genuinely become necessary, and then the instrument is a succession certificate from the District Judge, or letters of administration or probate where the estate is wider or a will exists.

The thresholds differ between banks and are revised, so there is no national figure to quote. Ask the branch for the bank's published deceased-claim policy — most banks publish it on their website — and read the threshold off it rather than accepting a verbal account of what it is.

One further distinction catches families out. A succession certificate covers debts and securities: bank balances, deposits, shares, debentures. It does not cover immovable property. If the estate includes a house, that is dealt with by mutation in the revenue or municipal record, not by anything the bank asks for.

Notify the branch of the death in writing and ask for the deceased-claim form and a copy of the bank's deceased-claim settlement policy. Ask at the same time for a statement of the account as at the date of death and for a list of all accounts, deposits and lockers held by the deceased at that bank. Doing this in a single written request creates a dated record and often surfaces accounts the family did not know about.

Complete the claim form. It will ask for the deceased's account details, the date of death, the claimant's identity and relationship, and — where there is no nominee — particulars of all the legal heirs.

Attach the death certificate, the claimant's identity and address proof, the deceased's passbook or statement and unused cheque leaves, and the debit card. Where there is no nominee, attach whatever establishes heirship: a legal heir or surviving member certificate from the revenue authority is the standard document, and some banks accept a family pension order or similar.

Where the bank invokes its simplified settlement route, you will be asked to sign an indemnity, and the other heirs may be asked for letters of disclaimer confirming they do not object to payment to the claimant. Read the indemnity: you are undertaking to make the bank whole if someone else turns out to be entitled, which is a real obligation, not a formality.

Submit the claim and take a dated acknowledgement with a reference number. Banks are held to a defined period for settling a deceased claim from the date the complete claim is received, and are required to report claims pending beyond it to their customer service committee. That reporting requirement is the lever behind an escalation.

If the claim is not settled within the bank's stated period, escalate in writing to the bank's nodal officer for grievances, quoting the reference number and the date of submission. If that fails, escalate to the Reserve Bank's ombudsman scheme, which covers deficiency in service by banks and is free to the complainant.

Once the balance is released, close the account formally and obtain written confirmation of closure. An account left open with a nil balance can attract minimum-balance charges and will complicate the estate later.

Deal with the term deposits separately. Premature termination of a term deposit on death is permitted and the regulator's framework addresses how interest is treated in that situation; ask the bank to apply its policy rather than accepting a penalty as automatic.

The bank account is rarely the whole estate, and the other institutions run on their own regulators' frameworks rather than the banking one.

For securities held in a demat account, the process is transmission rather than settlement. The claimant submits a transmission request form to the depository participant with the death certificate and supporting documents. Where a nominee is registered, the documentation is light — the transmission request, an attested death certificate and the nominee's identity documents. Where there is no nomination, the depository participant identifies the surviving legal heirs under the succession law applicable to the deceased, and the documentary requirements rise accordingly.

The securities regulator has issued specific directions on smoothing transmission from a nominee to a legal heir, and on nomination norms for demat accounts and mutual fund folios, including how many nomination fields must be provided and what happens where a nomination was not made. These have changed more than once in recent years, so take the current requirement from the regulator's circulars rather than from an older account of the position.

The regulator's investor education material is the most accessible statement of what a nominee in the securities market can and cannot do, and it repeats the same crucial point as the banking framework: the nominee receives the assets, which does not settle the question of who is beneficially entitled.

Life insurance runs differently again. A claim is made to the insurer on its own claim form, and where a nomination exists the proceeds are paid to the nominee. Certain categories of nominee under insurance law hold beneficially rather than as a mere collector, which is a genuine legal difference from the banking position and is worth checking on the specific policy.

Provident fund, pension and gratuity claims go to the employer or the relevant authority and turn on the nomination filed there, which is frequently decades out of date. The nomination on a provident fund account made at a first job is one of the most commonly stale documents in the system.

The general lesson runs backwards as well as forwards. If you are reading this while everyone in the family is alive, updating the nomination on every account, deposit, folio, policy and fund — and making a will that matches those nominations — removes almost every reason a family will ever need a court.

Refusals fall into a small number of recognisable patterns, and each has a specific answer.

The branch demands a succession certificate despite a valid nomination. Ask, in writing, which provision of the bank's board-approved deceased-claim policy requires legal representation where a nomination exists, given the regulator's position that banks should not insist on it irrespective of the amount. Copy the request to the bank's nodal grievance officer.

The branch demands consent from every heir even though a nominee exists. Nomination is precisely the mechanism that avoids this; consent letters are a feature of the no-nominee route, not the nominee route.

The claim sits unactioned. Quote the acknowledgement number, the date of submission and the bank's own settlement timeline, and ask for the claim to be reported to the customer service committee as pending. The requirement to report pending claims exists for exactly this situation.

The bank says there is no record of the account. Ask specifically whether the balance has been transferred as an unclaimed deposit, and search the central register.

If internal escalation fails, the ombudsman scheme for banking services is the external route. It is free, it is designed for individual complainants without representation, and a bank that has ignored its own policy is on weak ground before it. Where the sum is large enough that a court is genuinely required, free legal aid through the district legal services authority covers succession petitions for those eligible, and the eligibility categories are wider than most people assume.

Throughout, keep a dated log of every visit, call and letter, with the name of the officer spoken to. Where a claim stalls, that log is what makes an escalation credible, and it costs nothing to keep.