Nomination in a bank account is an important task, considering the complications involved in transferring your money after your passing. When you fill out a form to apply for a Savings Account, you will find a section where you can mention a nominee for a bank account.
What is nomination in bank account?
Bank account nomination is the process of naming a trusted person to claim the money deposited in your Savings Account after you pass away. The bank transfers the remaining balance in the Savings Account to the nominee.
Importance of having a nominee for a bank account
Now that you know what is nominee in bank, learn what is the importance of having one:
- Bank account nomination simplifies the process of transferring your funds to the rightful owner after you move on.
- Lack of nomination in bank accounts leads to a rise in unclaimed deposits pending with the Reserve Bank of India (RBI).
Differences between a lawful heir and nominee
| Basis |
Lawful heir |
Nominee |
| Meaning |
The successor - they are named as such in the will of the original holder. |
The custodian of your funds in the event of death. |
| Role |
Beneficiary of the funds of the deceased. |
Is a trustee. |
| Documentation |
Needs to submit the will of the deceased, a court order, or a succession certificate to claim the funds owned by the deceased. |
Does not need to provide any additional documents to claim the funds in the bank account of the deceased. |
What are the bank account nomination rules?
The RBI specifies bank account nomination rules to streamline the process of bank account nomination:
- Only one person can be nominated as the nominee of a bank account.
- In the case of a minor's bank account, only a person legally entitled to act on behalf of the minor can select a nominee.
- The nomination for a Joint Account must be made by all depositors jointly.
- You can appoint a non-resident as your nominee, but the amount will be credited to their NRO Account in the event of death.
Who can be a nominee for a bank account?
There are no restrictions on who you can select as your nominee. You can nominate your spouse, a parent, or any other trusted person. The process of appointing a nominee is quite simple. If you open a Digital Savings Account with Axis Bank, the nomination process would be paperless. No branch visits are required for account opening or nomination. Additionally, you can get an instant Debit Card and several other benefits like cashbacks and discounts at restaurants and stores.
Points to keep in mind when nominating
- The bank account nomination facility is allowed for accounts opened in an individual capacity only. This includes your individual and joint Savings Accounts, Fixed Deposits, and the accounts of your sole proprietorship.
- The nominee is only a trustee and a custodian of the funds in your bank account. The rightful owner would be decided as per succession rules and the will of the deceased.
- Select a trusted person as the nominee of your bank account. You can appoint your legal heir as the nominee to simplify the process, but it is not mandatory.
Also Read: Flexible banking through Zero Balance Savings Accounts
Conclusion
Nomination simplifies the process of transferring your funds to the rightful person after you pass away. If your bank account does not have a nominee, your legal heirs may need to go through the hassle of producing court orders and succession certificates.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
