Nomination Facility in Savings Account
Appointing nominee in bank account is necessary so that if the account holder dies, his bank account proceeds could be transferred to the nominee. When there is no nominee assigned in the bank account then the legal heir will have to go through long and tedious process to receive the bank account proceeds of the demised account holder. therefore, it is always good to appoint a nominee to avoid such a situation.
Nomination Facility is available in Savings Account in India as per RBI guidelines. The account holder/s can appoint a nominee in his/ her/ their Savings account. 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 can be registered either at the time of opening the account or at any time after the account is opened. Whenever you open a bank account there is a section in the form which requires to fill the nominee details and the nomination can be made by filling in the details of the nominee in the assigned column of the account opening form. Account holder/s can make nomination by filling up the Form prescribed under the Banking Companies (Nomination) Rules 1985.
Who is a Nominee?
The nominee is a trustee for legal heirs for receiving the money or proceeds of the account after the demise of the account holder/s. On the event of account holder's death, the nominee has the right to claim the proceeds of the savings account. It is always suggested to register a Nomination in your Savings Account as the Nomination enables banks for faster and easier release of funds/ proceeds of that account in the name of the nominee without insisting upon a will or probate, succession certificate or letter of administration.
One can make nominee to any of the following persons,
- Spouse
- Parents
- Children
- Sibling
- Any Family Member
What is the Power of Nominee?
- Nominee has the right to receive the proceeds of the bank account
- Nominee can only claim the bank account proceeds in case of death of the account holder
- Nominee is the trustee/ custodian for a temporary duration
- Nominee has the legal rights over the account deposits and is responsible for distributing the funds to the legal heirs ultimately as per the inheritance laws
Many banks allow the account holder to mention several nominees and assign percentages of bank deposit amount to each of them. Suppose no specific percentage is mentioned by the account holder then the bank would equally divide the amount among all the nominees.
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. If the nominee is minor then the account holder needs to provide details of the guardian acting as 'appointee'.
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.