What Are the Legal Remedies If a Bank Refuses to Release a Deceased Person's Funds to the Legal Heir?
If a loved one has passed away leaving behind funds in the bank, and bank refuses to release the deceased account holder's funds to the legal heir, the legal heir can escalate the concern to the bank's nodal officer, however, the practical aspects and implementation of the same generally differs.
What Rights Does a Legal Heir Have Over a Deceased Person's Bank Account?
A legal heir is entitled to claim the funds lying in a deceased person's bank account, or fixed deposits or cash/articles lying in the locker, either as a-
a) nominee,
b) jointly account holder,
c) or as an heir under succession law where there is no nomination.
Once either of the above is established, the banks cannot retain the funds without proper cause or impose conditions beyond what is permitted by the RBI.
Why Do Banks Delay or Refuse to Release Funds of a Deceased Account Holder?
Banks can release funds only after completion of all necessary documentation and after carrying out due diligence. If, however, there is a dispute within the legal heirs or any third party claim is raised, banks refuse to release funds in such cases, without a court order.
Remedies, step by step
- File a complete written claim- A written claim must be submitted along with the bank's standard claim form. The said form must be submitted along with the necessary documents as required by the bank. Once submitted, a dated acknowledgement must be sought and kept safely.
- Escalate the issue within the bank- If the banks are delaying even after submitting all the documents, usually more than 15 days, the issue can be escalated in writing with the bank's grievance redressal channel and its Internal Ombudsman.
- Obtain a succession certificate, probate or letters of administration- Where the claim is above the threshold and either-
b) Or heirs are contesting,
The bank is entitled to insist on legal representation. The legal heirs in such a case should apply for a succession certificate or for probate or letters of administration, as required by the bank
What Documents Are Required to Claim a Deceased Person's Bank Account?
The documents required in order to claim the funds of a deceased person’s account being a nominee or a legal heir or beneficiary under a Will are as below-
· Death certificate of the deceased
· Address proof and PAN Card
· Claim form where a nominee exists
· Legal heir certificate and affidavits
· Identification documents of the claimant
· Succession certificate, letter of administration, or probated Will for larger or contested claims.
Exact document requirements can still vary slightly from bank to bank.
Nominee or legal heir: who actually owns the money?
As per Indian law and the established judicial precedents, a nominee does not become the absolute owner of the funds lying in the accounts of the deceased upon their death. The nominee merely acts as a custodian or trustee, for the benefit of the legal heirs of the deceased.
The rights of succession to the estate of the Deceased are governed by the applicable personal succession laws, and is therefore not overridden by nomination. The nominee holds the funds in trust and is obligated to transfer them to the rightful legal heirs.
The Supreme Court in the case of Ram Chander Talwar and Anr vs. Devender Kumar Talwar and Ors, reported in (2010) 10 SCC 671 , has held as under:
“Section 45-ZA(2) merely puts the nominee in the shoes of the depositor after his death and clothes him with the exclusive right to receive the money lying in the account. It gives him all the rights of the depositor so far as the depositor's account is concerned. But it by no stretch of imagination makes the nominee the owner of the money lying in the account. It needs to be remembered that the Banking Regulation Act is enacted to consolidate and amend the law relating to banking. It is in no way concerned with the question of succession. All the monies receivable by the nominee by virtue of Section 45-ZA(2) would, therefore, form part of the estate of the deceased depositor and devolve according to the rule of succession to which the depositor may be governed."
Bank Paid the Nominee? What are Legal Heirs’ Rights and Remedies in India
Steps the legal heirs can take-
- Notify the bank in writing- If a dispute exists between the nominee and the legal heirs, or legal heirs suspect a foul play on part of the nominee, the legal heirs must notify the bank in writing, generally through a legal notice, issued by an advocate, stating the facts and that the bank should not release funds to the nominee. A notice alone does not legally bind the bank to stop paying the nominee, however, It does caution the bank and exercise due diligence.
- File an appropriate suit against the bank restraining them from releasing funds to nominee- The legal heirs must proceed with filing an appropriate suit before the court of competent jurisdiction restraining the banks to release funds to the nominee in light of the dispute or suspected foul play.
- If the money has already been paid, proceed against the nominee- If the funds have already been released to the nominee, the legal heirs must file a suit for injunction, restraining him to transfer or use the funds, a suit for recovery of their share, etc.
- Obtain LOA/Probate/Succession Certificate- as the case may be, based on the facts and circumstances of each case.
- Take criminal action if there was fraud. If the nomination, the claim documents or the death-claim papers were forged or fraudulently obtained, a criminal complaint can be filed under the relevant provisions of the Bharatiya Nyaya Sanhita, 2023 (cheating, forgery and criminal breach of trust).
Succession Certificate vs Legal Heir Certificate vs Probate vs Letters of Administration Which One Do You Need?
LEGAL HEIR CERTIFICATE OR SURVIVOR MEMBER CERTIFICATE- A Surviving Member Certificate, commonly referred to as a Legal Heir Certificate, is a document issued by the appropriate government authorities iterating the surviving legal heirs left behind by a deceased. A surviving member certificate is a vital document which is of importance while claiming the transfer of assets, settlement of claims, and accessing various benefits after the death of a family member. An SMC is usually enough for small undisputed bank claims.
SUCCESSION CERTIFICATE- A succession certificate is obtained from a civil court by filing an application under the Indian Succession Act, 1925. This may take a few months and is mostly required for larger or disputed claims.
PROBATE - Probate is the process wherein the genuineness or veracity of the Will is legally confirmed by the judicial authorities. A Probate of will is the legal process through which a competent court certifies that a Will is genuine and valid, thereby authorizing the executor to administer the estate of the deceased in accordance with the wishes expressed in the Will by the deceased testator.
The court order confirms that the Will was validly executed by the testator, in a sound mind, without any force, coercion or undue influence and that the executor named is authorised to administer the estate. Previously, for Wills executed by Hindus, Buddhists, Sikhs, or Jains in the erstwhile Presidency towns of Mumbai, Kolkata, and Chennai, was mandatory however, probate is no longer compulsory now.
LETTERS OF ADMINISTRATION- Letters of Administration is issued by an appropriate court of competent jurisdiction under the Indian Succession Act, 1925. It authorises a person, usually the applicant to manage and distribute the estate of a deceased person when-
a) No will exists
b) There exists a Will, but no executor is named in the Will.
c) There exists a Will and an executor is also named, however, the executor has either predeceased the testator OR refuses to act.
|
S.No |
Situation |
What the bank can ask for |
Remarks |
|
1. |
Where Nominee is registered on the account of the deceased. |
None of the three. Usually, a claim form, death certificate and the nominee’s ID are enough for the bank to release funds. |
For accounts with a nomination or survivorship clause, banks can pay the nominee or survivor without asking for a succession certificate or probate, after proper due diligence. |
|
2. |
No nominee or survivor, claim within the threshold limit |
Legal Heir Certificate along with an affidavit or declaration. |
The threshold is ₹15 lakh for most banks and ₹5 lakh for co-operative banks. Below it, a claim form, death certificate, ID proof and a legal heir certificate or affidavit are enough. No third-party surety may be insisted on within this limit. |
|
3. |
No nominee or survivor, claim above the threshold, no will, no dispute |
Succession Certificate, though a Legal Heir Certificate or affidavit may still do. |
Above the threshold, claims are settled on succession certificates, legal heir certificates or affidavits sworn before a magistrate. In practice, banks usually ask for a Succession Certificate for large amounts. |
|
4. |
Deceased left a will that names an executor, claim above the threshold |
Probate or Letters of Administration |
Probate is no longer compulsory by law. The Repealing and Amending Act, 2025, which received Presidential assent on 20 December 2025, omitted Section 213 of the Indian Succession Act. However, for claims above the threshold, documents such as a succession certificate or probate are required. |
|
5. |
Will exists but names no executor named, or the executor has died or refuses to act |
Letters of Administration (with the will annexed) |
LoA does the job that probate would have done. |
|
6. |
No will, and the heirs need to administer the whole estate (bank funds plus other assets) |
Letters of Administration |
A Succession Certificate covers only debts and securities, such as bank deposits. LoA covers the entire estate. |
|
7. |
Dispute among heirs or third party claimants |
Probate, Succession Certificate or a court order only |
Disputed cases can only be settled on the basis of probate, a succession certificate or a court order. A Legal Heir Certificate or affidavit will not suffice. |
What Practical Steps and Documents Should Legal Heirs Take Before Approaching the Bank?
Before approaching the bank, legal heirs should-
c) Procure the original death certificate from appropriate authority in the city where the deceased passed away.
d) Procure a copy of AADHAR card of the deceased.
e) Assess and enquire whether there exists a nominee to the account of the deceased.
f) Procure a written NOC from co-heirs if only one person will operate the claim.
g) Collect identity proofs, details of addresses, and relationship proof with the deceased (Aadhaar, ration card, birth certificate etc.) for every legal heir
Once the documents are filed, a copy of all paperwork submitted to the banks must be kept safely along with the receiving/dated acknowledgment or receipt.
