Bank Account Nominee

As per RBI guidelines, nominee change in bank account facility is available in all Bank Accounts in India. As per the prevailing Banking Companies (Nomination) Rules, there can be only one nominee per account. However, the nomination can be changed subsequently anytime by the account holder/s by making a declaration to that effect, in the appropriate form.

Account holder/s can add nominee in bank account by filling up bank nomination change form prescribed under the Banking Companies (Nomination) Rules 1985. At the time of opening of account, the nomination form is available in account opening form. The customer can mention the name of the nominee in the required form. The nomination can be made only in favour of an individual and not in favour of Trust, Society, etc.

Nomination facility is not available in case of accounts opened in the name of a minor which is a self operated minor account. In case of a joint holding, nomination should be made by all the account holders jointly. An NRI can be made a nominee in a resident account.

Who is a Nominee in Bank Account?

Bank account nominee is an individual who is entitled to receive all the proceeds/ monies on the death of the account holder/s. The nominee acts as a trustee and receives the account proceeds from the bank as a trustee of the legal heirs and then transfer funds to the legal heirs.

How Many Nominees can be Appointed?

An account can have only one individual as nominee in bank account. Multiple nominations are not allowed. Banks allow different nominees for different accounts of same account holder. You should also appoint a nominee for your locker.

Who Can Make Nominee in Bank Account?

Following persons can make nominee in bank account:

1. Bank account holder having account in his/ her individual name or in joint names of two or more individuals can nominate.
2. Legal Guardian on behalf of Minor's account can nominate i.e. the person who is lawfully entitled to act on behalf of the minor in respect of a account.

Who Can be Appointed as Nominee?

The account holder can appoint as nominee to any individual be it the family member like parents, children, spouse, relative, friend or anyone any other person whom the account holder trusts. A nominee may or may not be a legal heir. If the nominee is not the legal heir, he or she will not be entitled to the funds.

So in toto, any of the following persons can be appointed as nominee in your bank account,

1. Any family member such as your spouse, children or sibling, etc.
2. A person you trust
3. Any relative, friend or will-executioner

Features of Nomination

1. The nomination of candidates facility is covered by the Banking Regulation Act, 1949.
2. Nomination facility is made available to all types of deposit accounts i.e. nomination can be made for all types of accounts - Savings, Current, Demat, Fixed or Recurring Deposit.
3. Nomination is available only in accounts opened in individual capacity i.e. single or joint accounts as well as accounts of a sole proprietary concern.
4. As per the prevailing Banking Companies (Nomination) Rules, an account can have only one nominee.
5. Nomination can be made in favour of a minor also.
6. In a Joint Account, the nominee's right arises only after the death of all the account holders.
7. It is very easy to add a nominee in an account by simply filling up nomination form and submitting it to your bank branch.
8. You can add/ delete/ modify the name of nominee any number of times during your life time till your account is in force.
9. Minor account holder can't appoint a nominee.
10. Nomination can't be made by an account holder of any representative capacity such as the holder of an office like Director of a Company, Secretary of an Association, partner of a firm, Karta of an HUF, etc.
11. While making nomination, its cancellation or its variation, the applicable rules are required to be followed.

When to Nominate?

You can nominate either at the time of opening of your bank account or subsequently at any time as long as your bank account is in force. There is a specific nomination form that you need to submit to your bank for registeration of nomination in your account.

Nomination Benefits

• Nominee has the right to receive all the proceeds of the account on the occasion of demise of account holder/s.
• The bank will release the proceeds, monies or contents to the nominee with very minimal documentation.
• The bank will not ask for a will, a succession certificate, letter of administration or court order.

If the Account Holder Does not wish to make Nomination

If the depositor/s does/ do not wish to make nomination, they need to specifically mention the same and the same should be recorded on the account opening form by the depositor(s) with their full signature, without giving scope for conjecture of non-compliance.

Can you Appoint Minor a Nominee of Bank Account?

You can appoint nominee to a minor also. If a minor is appointed as nominee in an account, it is mandatory to mention the details of minor's guardian (who is an adult) also. On the occasion of death of the account holder, the guardian will receive the proceeds of the account on behalf of the minor nominee till the minor does not attain majority.

Change of Nominee in Bank Account

If you wish to change of nominee in bank account, you can do so any number of times by filling up Form DA1, as long as the account is in force. You need to mention details of existing nominee, new nominee and your account details as well. All the account holders need to sign this form.

In case, you want to remove the name of existing nominee, and at the same time wish to submit fresh nomination, you need to fill up Form DA3. This is called 'variation of nomination'.

One can change or remove an existing nominee by submitting forms DA2 and DA3 respectively.

How to Remove Nominee from Bank Account?

If you wish to remove nominee from bank account, you can do so by filling up Form DA2. You need to mention details of existing nominee and your account details as well.

All the account holders are required to sign this form.

What Happens if No Nominee is in the Bank Account?

If there is no nomination in the bank account then when the account holder dies, the legal heirs need to go through the procedure of claiming the account's funds.

Difference between Nominee and Legal Heir

Nominee is an individual who is entitled to receive all the proceeds/ monies on the death of the account holder/s, but the proceeds may or may not be kept by him/ her. Bank is discharged of its obligations by providing the proceeds of bank account to the nominee. Once the proceeds of bank account is handed over to the nominee, the responsibility of its proper distribution is of the nominee and not the bank. A Legal Heir is the rightful owner of that proceeds of the account holder in legal sense. He can claim it from the nominee, in case he was not the nominee in that bank account.

Important Points to Remember Regarding Nomination

• Usually, a single nominee is appointed in the individually-held bank accounts.
• If a nominee is not registered in the account, then the legal heir becomes entitled to claim the account proceeds on the ocassion of the death of account holder.
• If the nominee is a minor, you have to appoint a guardian.
• The rights of a legal heir supersede those of a nominee.
• Nomination facilitates the bank to process the demised account holder's proceeds to the nominee without any delay.