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An FD is one of the top investment options in India due to the fixed returns that it offers and the almost negligible risk involved. According to the way the FD is held, the process of claiming the fixed deposit pans out.
FD, or fixed deposit, has been one of the most preferred investment plans when it comes to the people of India because of the fixed rate of returns and the almost zero risk that it involves. You can open an FD account individually or jointly.
For a jointly held FD, the contract of the FD usually takes place between the financial institution and the first account holder. In the event of the unfortunate death of the primary holder of the FD, there is a stringent process regulated by RBI in place.
If you are wondering how to claim a fixed deposit after death? The answer lies in the blog below.
Read on to find out more information about claiming an FD (fixed deposit) after the death of the primary holder.
Nominees and Holding Patterns in a Fixed Deposit
As stated above, the fixed deposit account that you open can be held individually or jointly. If the FD is held jointly, you have to select the operational mandate. Some of the common mandates that come in use include:
Either or Survivor
This account can be opened by only two people. The financial institution where the account has been opened will fulfil the instructions even if one of the account holders signs a certain request.
Former or Survivor
The primary account holder will be able to operate the account. The account can be operated by the secondary holder of the account only in the event of the demise of the primary holder.
Anyone or Survivor
This account can be opened by more than two people. The financial institution where the account has been opened will fulfil the instructions even if one of the account holders signs a certain request.
Latter or Survivor
The secondary account holder will be able to operate the account. The account can be operated by the primary holder of the account only in the event of the demise of the secondary holder.
Joint
In this case, the account can only be operated if each owner of the account signs a certain request.
Jointly or Survivor
In this case, the account can only be operated if each owner of the account signs a certain request. In case one of the holders dies, the surviving holder can operate the account.
Nominee
The FD’s nominee is known as the custodian of the fixed deposit. So, they are the trustees of this FD without having any specific rights over this FD.
How to Claim the FD After the Death of the Holder?
In case the holder of the FD dies, these are the various ways in which a financial institution will handle the claims:
Individual
In case the FD is held by a single account holder, then if the holder of the FD dies, the nominee will be able to withdraw the FD funds after they submit the holder’s death certificate. The nominee is also required to submit an identity proof to claim the funds.
In case the FD is without a nominee, then the holder’s legal heirs have to submit the succession certificate along with the death certificate in order to claim the funds under the FD.
Joint FD
Here are the different processes for claiming the FD if it is held jointly:
Either or Survivor:
In this case, the surviving holder can continue the FD unconditionally, but they need to submit a certificate of death of the primary holder of the account.
Joint or Survivor:
In this case, the surviving holder can continue to hold the FD unconditionally until it matures, but they need to submit a certificate of death of the primary holder of the account.
Anyone or Survivor:
In this case, the secondary holder will become the primary holder till the time of maturity of the FD. In case there are more than two different holders, then each one of them has to provide their signed consent agreeing with the transition.
Nominee’s Role in a Jointly Held FD Account
In a jointly held account, the role of the nominee will come into the picture only if all the holders of the FD account die. In case the legal heirs produce a certificate of succession, they can claim the FD amount from the account’s nominee.
Premature Claims for the FD After the Death of the Holder
The process of filing premature claims after the primary holder dies is a bit more complicated.
In Case of an Individual Account
In the event of the demise of the sole holder of the FD, the designated nominee or the legal heirs can request a premature claim of the FD fund. However, to do so, they would need to submit documents required for a fixed deposit claim, like their Know Your Customer (KYC) documents, the death certificate of the holder, and other documents that the financial institution requires so that they can close the FD account.
In case of premature withdrawal of the funds, there will be a loss of interest involved.
In Case of a Jointly Held Account
If the account is jointly held, the surviving holder can claim funds prematurely only if all the holders give such a mandate at the time of the opening of this FD account.
In the event of the demise of the holder of the FD, the designated nominee or the legal heirs must agree to the premature claim of the FD fund.
In case there are no surviving holders, the nominee can withdraw the funds only after they produce the documents required for a fixed deposit claim.
In case there are no surviving holders or any nominee, the legal heirs can withdraw the funds, but it is subject to the rules and regulations applicable.
Conclusion
Having the right investment plans is essential to grow your money and fulfil your future aspirations. Fixed Deposit is one such account that you can open to park your savings safely and allow them an opportunity for decent growth. While you open a fixed deposit account, ensure that you enter the nominee details irrespective of whether the account is individually held or jointly held.
The RBI has set stringent rules in place so that the funds are given to the rightful heirs or nominees. However, before you plan to open an account, ensure you read the rules carefully and then proceed.
