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How to Claim Fixed Deposit After Death?

27 June 2022

Fixed deposits have been the preferred investment option for Indians for many decades. The guarantee of a fixed return and near-zero risks make it a safe and reliable investment option. While a deposit can be held jointly, the FD, a contract, is usually between the first holder and the institution. So, what happens if the primary holder dies before the maturity of the deposit? How can the claim be filed? 

Here is everything that you need to know about claiming a fixed deposit after the death of the primary holder.

The Reserve Bank of India (RBI) has stipulated stringent guidelines for dealing with claims due to the death of the primary holder of a fixed deposit.

Holding patterns and nominees in an FD

When you open a Fixed Deposit account, you can choose to be the only account holder or open it jointly. For jointly held fixed deposits, you need to choose the operational mandate. The commonly used mandates are:

  • Either or Survivor: Only two people can open this account. The financial institution will carry out instructions even if one joint account holder signs the request
  • Anyone or Survivor: More than two individuals can open this account. The financial institution will carry out instructions even if one joint account holder signs the request
  • Former or Survivor: Only the primary account holder can operate the account. The secondary account holder can operate only after the death of the primary account holder
  • Latter or Survivor: Only the secondary account holder can operate the account. The primary account holder can operate only after the death of the secondary account holder
  • Joint – The account can be operated only when all the account holders sign the request
  • Jointly or Survivor – Similar to Jointly, with the only difference being that in the event of the demise of the account holder, the survivor can continue to operate it.

Nominee: A nominee is the custodian of a fixed deposit. Therefore, he/she is the trustee of the FD with any right over it. We will discuss more on fixed deposit nominee rights in this article.

Claiming FD after the death of the account holder

Here is how financial institutions handle claim payments after the death of the account holder of an FD:

Individual

If the FD is held by an individual (only), then upon the death of the account holder, the nominee needs to submit the death certificate of the account holder to withdraw the funds. The nominee is also required to submit proof of his/her identity.

If an individually-held fixed deposit account does not have a nominee, then the legal heirs are required to submit a death certificate along with a succession certificate to withdraw the funds.

Joint account

Here are the processes for claiming a Fixed Deposit after the death of a joint account holder:

  • Either or Survivor Joint Account: The survivor can unconditionally continue the FD account upon producing the death certificate of the primary account holder.
  • Jointly or Survivor Account: The survivor can continue holding the FD account until maturity on providing the death certificate of the primary holder.
  • Anyone or Survivor Joint Account: The secondary holder assumes the primary role until the maturity of the fixed deposit. If there are more than two account holders, then it is important for all of them to provide signed consent for the transition.

Role of the nominee in a joint account

The nominee comes into the picture only when all the account holders in a jointly-held fixed deposit expire. If the legal heirs have a succession certificate, then they can claim the fixed deposit proceeds from the nominee.

Premature FD claims after the death of the account holder

If the survivors want to claim the fixed deposit prematurely after the death of the primary account holder, then the process is slightly more complex. 

Individual Account

The legal heirs or the appointed nominee can request for a premature withdrawal of the fixed deposit in the event of the demise of the sole holder of the FD. However, they will have to produce documents like the death certificate, their KYC documents, and various other documents as specified by the financial institution to close the account. There might be a loss in interest based on the timing of the premature withdrawal.

Joint Account

In the case of joint accounts, the survivor can request a premature withdrawal of the FD only if all the joint account holders give a mandate at the time of opening the account. It is important to remember that a premature withdrawal of FDs in the event of the demise of the account holder is permitted only if the survivors and legal heirs agree to it.

If there are no survivors, then the nominee can request the same after providing all the required documents.

If there are no survivors or nominees, then the legal heirs can request for a premature withdrawal of the FD subject to compliance with the rules.

Summing Up

If you are opening a Fixed Deposit account, then it is prudent to ensure that you appoint a nominee regardless of whether you are opting for an individual or joint account. The RBI has laid down rules to ensure that the funds go to the rightful successors after the death of the account holder. However, it is important to ensure that you understand these rules and create nominees and account types accordingly.

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