Saya & Associates
Bank nominee vs legal heir: who gets the money in India?
The bank has paid, and the family disagrees
After a parent's death, the bank pays a deposit to the sibling recorded as nominee. That sibling tells the others the bank has confirmed the money is theirs, and nobody else can claim it.
The bank's payment does not establish that. It answers who the bank could safely pay, not who is entitled to keep the money. This example is fictional.
What the RBI requires of the bank
| Situation | What the RBI's 2025 directions say |
|---|---|
| A nominee or survivorship clause exists | Payment is a full and valid discharge if the bank verified identity and death, knew of no court order restraining payment, and told the recipient in writing they receive it as trustee of the legal heirs |
| Documents from a nominee | A claim form, the death certificate and the nominee's identity document. No succession certificate, probate or indemnity bond, whatever the amount |
| Joint account | The nominee's right arises only after all the depositors have died |
| No nominee, smaller claims | A simplified procedure up to Rs 15 lakh (Rs 5 lakh for a co-operative bank), or a higher limit the bank sets |
| An undisputed will | Probate or letters of administration, though the bank may act on the will without probate if there is no dispute and it is satisfied |
| Contested claims | Probate, letters of administration, a succession certificate or a court order. A court order restraining payment stops settlement while it is in force |
| Time limit | Settlement within 15 calendar days of receiving all documents, with interest of at least Bank Rate plus 4% for delay the bank causes |
These rules come from the RBI's directions of 26 September 2025, which banks had to implement by 31 March 2026. The RBI has since consolidated many of its directions, so check the current version that applies to the bank concerned.
Payment is not ownership
Two questions stay separate. The first is whether the bank properly discharged its liability by paying the nominee. The second is whether the nominee may keep all of the money against an heir's claim.
The RBI's trustee requirement answers the first without deciding the second. The bank's role ends with a valid payment; the family's dispute, if there is one, continues against the person who received the money.
A nominee may also be an heir
A nominee may separately be entitled to inherit some or all of the deposit. It is equally wrong to say that every nominee must hand everything over to someone else.
Entitlement depends on the deceased person's interest in the funds, the succession law that applies to them, the family relationships, any will and any court order. Do not announce equal shares before that work is done.
A nomination and a will also do different jobs. If both exist, obtain the actual documents rather than relying on a description of either.
Up to four nominees since November 2025
The Banking Laws (Amendment) Act, 2025 and the Banking Companies (Nomination) Rules, 2025 came into force on 1 November 2025. A depositor may now nominate up to four individuals, either successively or simultaneously.
| Type | How it works |
|---|---|
| Simultaneous | Each nominee receives a stated percentage, and the percentages must total 100% |
| Successive | Nominees are ranked, and a lower nominee takes effect only after the death of the one above |
Under the RBI's nomination directions, if a simultaneous nominee dies before receiving their share, that share is settled as if the account had no nominee.
More nominees change whom the bank pays. They do not turn a nomination into a will, or the nominees into owners.
Check the account before applying any rule
A family may describe several products as "money in the bank". Ask for the actual records:
| Record | Why it matters |
|---|---|
| Account or deposit details | Identifies the savings, current or term deposit being claimed |
| Account holders | Separates a sole account from a joint one |
| Survivorship instruction | Shows whether "either or survivor" or a similar mandate applies |
| Nomination record | Shows the registered nominees, and their order or shares |
| Will or succession documents | Bear on entitlement beyond the bank's payment |
| Court orders or pending claims | Show any restriction on payment |
The RBI's claim directions do not apply to government savings schemes run through banks, such as the Senior Citizens Savings Scheme and the Public Provident Fund. Those follow their own scheme rules.
If you are the nominee
Keep a record of the claim, the documents submitted, the bank's letters and the amount received, including the bank's written trustee notice. Do not treat the whole amount as your own until entitlement is clear.
If another person asserts a share, ask for the basis and take advice. An objection does not prove the claim, but the bank's payment does not defeat it either.
Do not use the deceased person's password, card or banking app in place of the formal claim. If any transaction was made after the death, tell your adviser the date and purpose.
If you are an heir and someone else is the nominee
A letter or legal notice to the bank does not stop payment. Under the RBI's directions, what stops a payment is a court order restraining it, known to the bank on the date of settlement.
If payment is still pending and there is a real risk the money will be dissipated, take advice promptly on whether to apply to the court. Bring the evidence of that risk to the first consultation.
If the bank has already paid, the claim generally lies against the person who received the money, not against the bank for a second payment. Preserve what shows the recipient, date and amount.
Certificates and no-objection letters
A legal heir certificate, a succession certificate, probate and a private family agreement are not interchangeable. Ask why a document is required and which question it answers.
Before signing a disclaimer or no-objection letter, check whether it covers only the bank's payment or a wider release of your rights. The wording matters more than how the form is described to you.
Handling a deposit after a death
- List each account. Note the bank, account type, holders and any survivorship clause.
- Ask for the nomination record. Obtain the registered nominees, their order or shares, and the bank's claim process in writing.
- Collect the core documents. Gather the death certificate, identity documents and any will, order or succession document.
- Identify the succession law. Establish which law governs the deceased person's estate and who the heirs are.
- Raise disputes early. If you contest a payment, take advice on whether a court order is needed before the bank settles.
- Record what is paid. Keep the settlement letter, amount, date, recipient and the bank's trustee notice.
Frequently asked questions
Does a bank nominee own the money after the depositor's death?
Not because of the nomination alone. Under the RBI's directions, the nominee receives the payment as trustee of the legal heirs, and an heir's claim against the nominee survives to the extent of the payment.
Can a nominee also be a legal heir?
Yes. A nominee may separately be an heir or a beneficiary under a will. The nomination itself does not decide how much, if any, they are entitled to keep.
Will a legal notice stop the bank paying the nominee?
No. The RBI's directions treat a court order restraining payment, known to the bank, as what prevents settlement. A letter or notice does not have that effect.
How many nominees can a bank account have?
Since 1 November 2025, up to four individuals, either simultaneously with percentage shares totalling 100%, or successively in order of priority.
How long does a bank have to settle a deceased depositor's claim?
Under the RBI's 2025 directions, 15 calendar days from receiving all the required documents. For delay the bank causes, it must pay interest of at least Bank Rate plus 4%.
The takeaway
Separate the bank's payment from the family's entitlement. Start with an account-by-account list, the nomination record and the documents on succession, then decide whether the dispute is with the bank or with the person paid.
To discuss a disputed deposit or estate, contact Saya & Associates with the account details, the nomination record and any date the bank has given.
This article provides general information on Indian banking and succession law as at 23 October 2026. Entitlement depends on the account, the nomination, the succession law and any court order. It is not legal advice.
Sources
- Reserve Bank of India (Settlement of Claims in respect of Deceased Customers of Banks) Directions, 2025, 26 September 2025
- Reserve Bank of India (Nomination Facility in Deposit Accounts, Safe Deposit Lockers and Articles kept in Safe Custody with the Banks) Directions, 2025, 28 October 2025
- Banking Companies (Nomination) Rules, 2025