Question: If the customer died and the bank receives a standing instruction payment later, can it credit an estate account instead?
Answer: Yes, the bank may route such funds according to the deceased-account handling process, including estate treatment where appropriate.

Supporting evidence:
title: rbi.org.in/Notification.aspx
quote: The bank could be authorized by the survivor(s) / nominee of a deceased account holder to open an account styled as 'Estate of Shri __________, the Deceased' where all the pipeline flows in the name of the deceased account holder could be allowed to be credited, provided no withdrawals are made
context: e withdrawal would be permitted may also be specified in the account opening form. Such premature withdrawal would not attract any penal charge. 20.4 Treatment of flows in the name of the deceased depositor In order to avoid hardship to the survivor(s) / nominee of a deposit account, banks should obtain appropriate agreement / authorization from the survivor(s) / nominee with regard to the treatment of pipeline flows in the name of the deceased account holder. In this regard, banks could consider adopting either of the following two approaches: The bank could be authorized by the survivor(s) / nominee of a deceased account holder to open an account styled as 'Estate of Shri __________, the Deceased' where all the pipeline flows in the name of the deceased account holder could be allowed to be credited, provided no withdrawals are made. OR The bank could be authorized by the survivor(s) / nominee to return the pipeline flows to the remitter with the

remark "Account holder deceased" and to intimate the survivor(s) / nominee accordingly. The survivor(s) / nominee / legal heir(s) could then approach the remitter to effect payment through a negotiable instrument or through ECS transfer in the name of the appropriate beneficiary. 20.5 Interest payable on the deposit account of deceased depositor In the case of a term deposit standing in the name/s of a deceased individual depositor, or two or more joint depositors, where one of the depositors has died, the criterion for payment of interest on matured deposits in the event of death of the depositor in the above cases has been left to the discretion of individual banks subject to their Board laying down a transparent policy in this regard. In the case of balances lying in current account standing in the name of a deceased individual depositor/sole proprietorship concern, interest should be paid only from 1st May, 1983, or from the date of death of the depositor, whichever is later, till the date of repayment to the claimant/s at the rate of interest applicable to savings deposit as on the date of payment. 20.6 Time limit for settlement of claims Banks should settle the claims in respect of deceased depositors and release payments to survivor(s) / nominee(s) within a period not exceeding 15 days from the date of receipt of the claim subject to the production of proof of death of the depositor and suitable identification of the claim(s), to the bank's satisfaction. Banks should report to the Customer Service Commit