1. Before closing a customer's account due to "Undesirable Behavior", the bank is legally obligated to:
Give "Reasonable Notice" to the customer to make alternative arrangements.
Forfeit the balance in the account.
Obtain permission from RBI.
Close the account immediately without notice.
Explanation:
Based on the principle of natural justice and legal precedents (like Prosperity Ltd vs Lloyds Bank), a bank must provide reasonable notice to the customer before closing an account to allow them time to clear cheques and make alternate arrangements.
2. For settlement of claims in deceased depositor accounts without nomination/survivorship clause, the bank should generally insist on Succession Certificate only if:
The account is a current account.
The amount exceeds the threshold limit (policy) and there is a dispute among legal heirs.
The amount is very small.
The deceased was a minor.
Explanation:
RBI advises banks to settle claims simply on indemnity for small amounts. Legal representation (Succession Certificate) should be insisted upon only in cases of large amounts or disputes to avoid harassment of heirs.