Nominees in Fixed Deposit Accounts

A nominee is a person appointed to receive the funds from a fixed deposit upon the death of the account holder. Banks and NBFCs require you to assign an individual to ensure a smooth transfer of funds. 

In the unfortunate event of your demise, they can claim the benefits of the account. This ensures that the funds are transferred efficiently and provide financial support to your loved ones.

Here are the responsibilities associated with adding a nominee to your account as per the Reserve Bank of India (RBI):

Responsibilities

• You serve as a trustee to ensure that the funds from the FD are distributed fairly to the legal heirs 

• You need to protect the assets until they are handed over to the legal heirs

Appointing a nominee for your FD is a smart decision for a variety of reasons. Here is why it is important:

• Ensures Smooth Fund Transfer

This ensures that the funds from your account are smoothly transferred to your legal heirs. Without a nominee, your heirs need to prove their relationship and submit a death certificate to get the funds.

• Provides Financial Protection

They ensure that the initial deposit and the interest amount are distributed among legal heirs. This provides financial security and peace of mind to your family in your absence.

• Simplifies Legal Matters

This helps avoid complex legal procedures in case of your demise. It ensures your loved ones receive their share without unnecessary complications or delays. It also makes the transfer process easier for the financial institution holding your FD.

To add a nominee to your account, you may have to submit the following documents:

• Identification proof

• Address proof

• Passport-size photographs

• Filled out nomination form

The process is quick and convenient. You can choose to carry out the process online or offline, as per your preference. Here are some steps you may have to follow:

1. Go to the official website or visit the branch of the bank or NBFC 

2. Obtain the nomination form online or from the bank representative and fill it out with the necessary details

3. Add a person that you wish to appoint as a nominee for your account

4. Cross-check the details of your account as well as the information of the individual

5. Submit the completed nomination form to the bank along with the required documents

You can do so by following these steps:

1. Get a new nomination form from the bank or NBFC 

2. Complete the form with updated information, including the name of the new nominee

3. Submit the filled nomination form to the issuer

4. Review and update the nomination details

It is a common misconception that a nominee and a legal heir are the same. Refer to the following table to know how they differ:

After the demise of the FD holder, the claim process may differ in the below cases:  

• With Nomination

You can claim the corpus by submitting the account holder's death certificate and your KYC documents

• Without Nomination

The heirs could submit the claim form, death certificate, and succession certificate to get the funds

According to the law, rightful heirs are entitled to inheritances rather than nominees. However, there is an exception when it comes to shares. If you are a nominee for specific shares, you hold ownership of those shares. This rule applies unless a will says otherwise.