Nominations Must have for the Security of your near & dear ones!
I recently came across a report by RBI which stated that around Rs. 1100 crores of unclaimed money is lying with the Indian Banks. (I could instantly relate to the death in a friend’s family where person had died without making nominations in his salary account).
The report further stated that a major portion of this unclaimed money belongs to HUF (Hindu Undivided Family) and Individuals, mainly attributing to the death of account holder.
Probably they were not conscious about availing the nomination facility, or postponed it to later date only to meet untimely death later. This has not only deprived their legal heirs but also posed a problem for the banks to manage these unclaimed funds.
To combat this double edged problem, the Government of India amended the banking laws in 1983 to provide for nomination facilities in respect of all banking accounts. Still many of us are not aware of this facility or do not want to come face to face to the fact that unforeseen can happen to us. But nomination is important and all of us must do it.
So what is the process involved?
You can file a request for nomination of either ( Is it either or/ or both? ) a single account or a joint account in form No. DA-1. You can nominate any person to receive the amount lying to the credit of the account in case of your death or the death of any of joint account holders.
This form is applicable for all types of deposit accounts, be it savings account, recurring deposit account, fixed deposit account or even a current account. You can submit the nomination form at the time of opening the account, and can even submit the request for nomination at any time subsequent to opening of your bank account.
In case you wish to cancel the nomination at any point of time in the future, you can do so simply by submitting Form No. DA-2. If you wish to modify the existing nomination, then submit Form No. DA-3. It is advised to keep nomination of someone on the account alive at any given point of time.
If you are submitting a request for cancellation of nomination, then immediately submit a fresh request for nomination in Form No. DA-1 simultaneously.
This exercise of making nomination, cancellation and variations can be made as many times as you want by filling simple forms available with the bank. It is important to obtain a written acknowledgment of any request made to the bank whether of nomination, cancellation or variation thereof. The banks normally give acknowledgment in a tear off of the form being submitted.
You must keep photocopies of the forms to avoid any dispute in future and also for a ready reference. The banks also make note of such submission of nomination forms or variations/cancellations thereof in their records. Whenever there are deletion or addition to the original bank account, ensure that the nomination form is also filed with the bank covering all the account holders at the relevant time.
So who can make the nominations?
Nomination facility is available in case of individuals only, and to other entities like partnership firms, Limited Companies and Trusts etc. However, this facility of nomination is also available to all the accounts operated by proprietors in respect of their business concerns including current accounts .
In case of minor account holders, it can be made by a person who is lawfully entitled to act on behalf of the minor. Normally any parent or a guardian legally appointed can make nomination in respect of bank account of a minor.
However if your nominee is a minor, then you will have to appoint a person to receive the money on behalf of the minor in case the account holder dies while the nominee is still a minor. In case of death of the person who has made nomination in favour of a nominee, and the minor has become a major, the person so nominated can claim the money from the bank himself.
In case one of the joint accountholder dies without having made any nomination, the remaining account holder/s can still make a valid nomination in respect of the bank account. After death of one of the account holder, the bank will remove the name of the deceased from the account and the remaining account holder/s remain the account holder/s.
In case of only one account holder surviving, he becomes the sole account holder of the account. However in case you are holding deposit account jointly, all the joint account holder have to make a request for nomination and a nomination request not signed by all the account holders will not be a valid request.
The nomination will remain active and alive even if the deposit account is renewed. The nomination automatically gets renewed on renewal of the deposit from time to time.
In case of death of the person who made the nomination, the nominee steps into the shoes of the account holder and becomes entitled to all the rights of depositor as against the bank. He is entitled to give a valid discharge for payment of the money due to the bank. As far as the bank is concerned, it recognizes only the registered nominees and not the legal heirs.
However, while making a claim as a nominee, you need to attach a valid proof of death of the account holder together with the claim in the prescribed form. The banks are also supposed to send a letter to the nominee in case no claim is filed within a period of three months after the notice of death of the account holder is given to the branch.
The legal heirs can lodge their claim for the money of the deceased against the nominee and not against the bank, once the bank has paid the money to the nominee as per the terms of the nomination filed with it.
The banks allow the nominee to foreclose the fixed deposit on submission of the relevant document like death certificate/claim form etc, however the banks can not grant any loan against such fixed deposit held by the deceased.
However in case any of the legal heirs has obtained any injunction from a court, you can restrain the bank from paying the money to the nominee.
So what are you waiting for?
Nominate your near and dear ones to secure their future, even when you are not there.