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Do FDs accrue interest after owner’s death

The following article was first published in the Mint newspaper on 4th October, 2022. The same was written by our Private Client team at Cyril Amarchand Mangaldas, who frequently publish their comments and opinions in the Mint. The online version of the article can be found here.

My parents died and I am their nominee in the various fixed deposits (FDs) they left behind. The FDs will mature on different dates in the next two years. Can I withdraw an FD at the time of maturity? What would be rate of interest payable on these deposits from the date of death of parents till the maturity date. Also, is it compulsory for the nominee to withdraw all FDs after the death of the holder?

—Name withheld on request

Your query infers that you are the only heir as well as the sole nominee under the term/fixed deposits (FDs) standing in the name of your parents. For withdrawing any FD at the time of its maturity, the relevant bank will require submission of the requisite documentation including the claim form, death certificate and indemnity.

You can also consider checking with the bank for the requisite compliances for transmission as of today.

As regards the rate of interest from the date of death of parents till the date of maturity, there should be no change in the interest rate. In other words, the bank should pay interest at the contracted rate till the date of maturity, regardless of the date of demise of your parents.

Further, as per the latest Reserve Bank of India (RBI) rules, if a FD matures and proceeds are unpaid, the amounts left unclaimed with the bank shall attract rate of interest as applicable to savings account or the contracted rate of interest on the matured FD, whichever is lower.

Therefore, while it is not compulsory to withdraw the FDs forthwith post their maturity, it will be beneficial for you to withdraw the FDs in a timely manner post their maturity.

I bought a residential flat in 2003 with my father as co-applicant. The loan was entirely paid from my salary in the last 18 years. My father died in 2004 without a will. I am planning to sell this flat, and my mother and two siblings are also fine with this. What are the documents that I will need to get from my mother and siblings for transfer of their share in the property to my name and charges associated with such a transfer?

—Name withheld on request

Assuming your father was a Hindu, the Hindu Succession Act (HSA) lays down provisions for the property of a Hindu male dying intestate. According to the rules of intestate succession under the HSA, your father’s estate will devolve on your mother, your two siblings and yourself in equal proportion, as ‘Class I’ heirs. We assume that both of you were the joint purchasers of the residential flat, each holding 50% share in such residential flat. Accordingly, as per the provisions of the HSA, your father’s 50% share in the residential house will devolve on your mother, your two siblings and yourself in equal proportion.

We note that you would like to get the residential flat in your name before selling it, and your mother and two siblings are willing to co-operate for the same. They can execute a release deed in your favour whereby all their rights, title and interest in the residential flat can be released and relinquished without any consideration in your favour for natural love and affection.

Do note that the release deed will have to be duly stamped and registered. The stamp duty and registration charges will depend upon the state in which the residential flat is located.