What is a Nominee in a Bank

Nomination is the service that enables the account holder or any other financial instrument investor to name someone to claim the deposit or the investment after the original owner of the asset or account passes away.

Therefore, the nominee is the person (or, in some cases, a firm) that the person has mentioned in the section of nomination for the asset or account that they are the legal holders of.

A nominee in bank means, as already mentioned, is someone who has been designated in the bank application as the person who would receive the proceeds of the account in the case of unexpected death. Anyone that the applicant considers to be the first relative could be mentioned.

Some banks also allow the applicant to mention several nominees and assign percentages to each one according to their bank deposit amount. If there is no specific percentage mentioned, then the bank would equally split the amount among all of the nominees.

The process of nomination is a critical task in the overview of bank procedures, and it causes ease of settlement of the funds of the actual account holder. RBI has produced proof of thousands of crores of unclaimed possession due to lack of nominee mention.

Therefore, it stands important for every account holder to mention a nominee during the application for a new deposit or bank account.

The process of nomination can process the person's assets to their nominee much easier in the event of death.

When the account holder's lawful heirs have not been mentioned as the nominee, it is a longer procedure to claim the account's funds from the bank.

The table below presents the distinctions between a legal heir and a nominee in detail:

A nominee for a bank account needs to be on the following list:

• A nominee in bank account meaning an individual who the holder of the account trusts could be the nominee (it could be a member of his family, child, spouse, relative, and more).
• If the nominee is not the legal heir, he or she will not be entitled to the funds.
• The nominee's duty becomes to act as the trustee and transfer funds to the legal heirs.
• There can be different nominees to different bank accounts with the same names.
• A minor can also be the nominee of an account, but the minor will have to be designated by a guardian, and the bank will have to give the funds to the guardian.

When the account holder has passed away, and their person has not made any nomination, the legal heirs will have to go through the procedure of claiming the account's funds.

Here are some general terms and conditions that apply to the nomination of a bank account:

• There usually needs to be a single nominee for a singly held bank account.
• A resident can also choose to nominate an NRI, but the repatriation of the sum will be only after the permission of the Reserve Bank of India.
• A person that has been legally empowered to operate the account of a minor can also file the nomination on behalf of the minor.

Every applicant needs to make a nomination with the form of the Banking Companies (Nomination) Rules 1985.

There can be changes to the details of the nomination during the subsistence of the account relationship by filling the same form as mentioned above.