I just bought an italian hindi grammar book and there was a part about exceptions for the oblique flexion of nouns: there's written that some tatsam nouns (the ones that come directly from sanskrit), all the relatives' nouns (father, grandfather, uncle ecc.) and the agent nouns that end in "ता" (search on the net if you don't know what they are) are not declined in the plural form and in the singular oblique case, but only in the plural oblique case (adding ओं): f.e. पिता (father): singular पिता, plural पिता, oblique singular पिता, oblique plural पिताओं.
No the Hindi word for maternal is मीतृ and that word is not in the sentence. Yes नाना is the word for "(maternal) grandfather" but the word "maternal" itself isn't there. If someone said ये मरे नाना हैं। And an English speaker asked what the person said the best translation would be "This is my Grandfather" because we don't make distinctions between paternal and maternal in English. When some one uses तुम you would translate it as "you" not "you plural" the word plural isn't there but the information is understood in the same way the maternal is not there the information is just understood. And since the actual word for maternal is not there, I am saying that is probably why it doesn't accept that answer, not that that answer would be entirely wrong.
There is no one correct translation. It depends on what is being said. Sometimes we simply translate it to "grandfather", sometimes the fact that it is the maternal grandfather matters. You decide how dynamic or formal your translation should be on a case-by-case basis. Since this sentence lacks context, they should allow us to be as exact as we want. Maybe somebody is answering that way because they're confused which is which and wants to check with the program. Why prevent a language learner from using a language learning software to learn a language? ^,^