NOMINATION FACILITY

Banking Companies (Nomination) rules 1985 permit banks to pay dues to nominee in the event of
death of depositor(s)
 Without asking for succession certificate
 Without verifying claims of legal heirs

WHAT IS NOMINATION FACILITY?

“ It is a facility that enables a deposit account holder(s) (Individual / Joint account holders or Sole
proprietor) or safe deposits locker holder(s) to nominate an individual who can claim the
proceeds of the deposit account(s) or contents of the safe Deposit locker(s) post the demise
of the original depositor(s) or locker holder(s)”

 Nomination facility is normally available for Savings, Fixed and Recurring deposit accounts
 For Current account deposits, it is available only in few cases
 It is advisable to record ‘nominee’ for any bank transaction
 Nominee means “A person who is proposed or formally entered as the recipient of a grant or
award”
 NOMINATION CASE 1

Husband A
IF A DIES

LEGAL HEIR

E B Wife
FIGHT
Nominee BETWEEN C D
WILL RECEIVE IN THE E&B
CAPACITY OF TRUSTEE Children
 NOMINATION
CASE 2
Husband A
IF A DIES

NOMINEE B Wife
C D Children
B WILL RECEIVE
IN THE CAPACITY
OF TRUSTEE
AT THE SAME TIME, SHE WILL
ALSO BE THE LEGAL HEIR,
HENCE, NO PROBLEM
 BENEFITS OF NOMINATION
 In the event of death of the account holder, the bank can release the account proceeds to the
nominee without insisting upon a succession certificate / court order
 The nominee holds the money in the capacity of a trustee on behalf of the legal heirs of the
deceased account holder
 The banks liability is duly discharged on payment to the nominee

MODALITIES FOR NOMINATION

 Individual account holders or Joint account holders can nominate a nominee.
 A sole proprietor can appoint a nominee to the sole proprietorship account with the bank.
 In case of a deposit in the name of a minor, nomination shall be made by a person lawfully entitled to
act on behalf of the minor.
 You can give nomination right away at the time of opening of bank account or even at a later date.
 You can cancel or change your nominee anytime during your lifetime.
 You can have only one person as a nominee.
 But, in the case of jointly operated locker account, you can nominate upto two people with common
consent.

ALLOWED WHEN THE
ACCOUNT IS HELD IN
INDIVIDUAL CAPACITY
 Individual accounts or Joint
accounts whether it is SD, FD,
RD
 Single proprietorship current
accounts
 Business accounts in individual
capacity
 Safe deposit lockers
NOMINATION
NOT ALLOWED WHEN THE
ACCOUNT IS HELD IN
REPRESENTATIVE CAPACITY
 Business accounts (current
Barring some
exceptions, accounts) of companies
 Current accounts of partnership
normally, you can
say that current firms or associations
 Any other account in
accounts do not
have nomination representative capacity
facility
HENCE NOT AVAILABLE FOR
LIMITED COMPANIES, HUFs,
PARTNERSHIP FIRMS, TRUSTS etc.
IF ACCOUNT HOLDER IF ACCOUNT HOLDER GIVES
SIGNS ON HIS THUMB IMPRESSION ON
NOMINATION FORM NOMINATION FORM

ONLY
TWO
ONE
WITNESS
WITNESS
 OTHER ASPECTS OF NOMINATION

 Any nomination registration, cancellation or change has to be witnessed.

 Nomination favoring minor is permitted.
 However, another individual is to be appointed to receive the money in the event of the death
of the account holder, while the nominee is still a minor.
 Nomination rules are governed under Banking Regulation Act 1949 and Banking Companies
(Nomination) rules 1985.
 While making nomination or cancellation witness is required and the request should be signed by
all the account holders in case of joint accounts.
 The right of nominee to receive payment arises, only after the death of the depositor.
 If the account holder makes the thumb impression, then it should be witnessed by at least 2
persons.
 ‘NO-FRILLS’ ACCOUNTS
 RBI issued guidelines in Nov 2005, for zero balance accounts.
 As per the circular issued by RBI in August 2012, all the ‘No-Frills’
accounts converted to Basic Savings Bank Deposit Accounts
(BSBDAs)

BASIC SAVINGS BANK DEPOSIT ACCOUNTS (BSBDAs)

RBI GUIDELINES ISSUED IN AUGUST 2012
 To have financial inclusion, BSBDA should be considered as normal banking service to all the
customers with zero balance irrespective of age & income
 Facility of ATM cum debit card at free of cost
 No limit on the number of times for depositing the amounts
 Only four withdrawals per month at branch or at ATMs
 Banks can decide about the price structure, if more than the above facilities are required
 KYC norms are to be followed. However, if proper KYC norms are not satisfied, then the account
should be treated as “BSBDA – SMALL ACCOUNT”
 Customer can have only one BSBDA in one bank
NOW, ZERO BALANCE ACCOUNTS
ARE PMJDY ACCOUNTS
 No minimum balance
 Interest on deposit
 Accident insurance cover of Rs 1,00,000 to all the account holders
 Life Insurance cover of Rs 30,000 to all the account
holders(However, the Govt. stated that this is applicable for the
accounts opened upto 26th Jan, 2015)
 After satisfactory operation of the account for 6 months,
overdraft facility of Rs 5000 to one member of the family
(Preferably, the lady of the household)
 Rupay card at free of cost
 If cheque book is required, minimum balance is to be maintained
 WHAT ARE “SMALL ACCOUNTS”

These are the accounts to be opened by a Bank, when the customer is not
able to satisfy KYC norms. This account has got several restrictions.

Stipulations for small accounts

 Aggregate of all deposits shall not exceed Rs one lakh per annum
 Aggregate of all withdrawals and transfers in a month shall not exceed ten thousand Rupees
 Maximum balance at any point of time shall not exceed Rs fifty thousand
 Foreign remittances cannot be credited to small accounts
However, small accounts are valid for a period of 12 months initially, which may be
extended by another 12 months, if the person provides proof of having applied for an Officially
Valid Document (OVD)
 BANKING OMBUDSMAN
 Senior official appointed by RBI to redress customer complaints against deficiency in certain banking
services.
 Under section 35 a of the Banking Regulation Act 1949.
 In operation with effect from 1995.
 At present fifteen banking ombudsmen are being operated mostly in state capitals.
 All scheduled commercial banks (including RRB’S, cooperative banks) are covered.
 Important items which come under the purview.
 Non-payment or inordinate delay in payment of cheques, drafts, bills etc…
 Failure to issue or delay in issue of drafts.
 Delay in payment of inward remittances.
 Non acceptance of coins / small denomination notes etc…
 Forced closure of deposit accounts without notice.
 Non-observance of RBI directives in certain cases.
 BANKING OMBUDSMAN

HOW TO COMPLAIN?
 First we should approach bank for any grievance.
 If the grievance is not settled by the bank in 30 days (If not replied / rejection by bank / reply does not
satisfy the customer), then we can approach the Ombudsman within 1 year.
 Complaint can be lodged on plain paper or by sending e-mail request.
 No charges involved.
 Maximum limit of award is Rs 10 lakhs. (Rs 1 lakh incase of credit card related complaints)
 If not satisfied, either of the parties can approach appellate authority within 30 days. Appellate authority
vested with a deputy governor of RBI.