BAJAJ BROKING
February 10, 2025
7 mins read
A bank account not only facilitates better financial planning but also helps fulfil eligibility criteria for various schemes and policies. Opening a bank account is a simple process, but it is important that you understand certain specifics in detail. Ensuring your hard-earned money reaches the right hands in your absence is one such example. Let’s begin by understanding what is a nominee in a bank account.
When you fill out an application to open your account with any bank, there is a separate section that requires you to fill in the details of a nominee. A nominee is the person whom you appoint to receive the funds in your bank account in case of your death. Appointing a nominee is vital to ensure that your funds are in safe hands even in your absence.
Since the role of a nominee is of vital importance, you must understand the details like who can be appointed as a nominee, rules, benefits etc. Read on as we walk through everything you need to know about a bank nominee.
Let’s start by understanding who can be appointed as a nominee for your bank account. A nominee can be any person:
With whom you have a fiduciary relation like your parents, spouse, children, relative or even close friends.
A minor can also be appointed as a nominee provided that there is a designated guardian appointed till the time the minor reaches the age of 18 years.
Note: You can appoint different nominees for your different bank accounts.
Now that you have a fundamental understanding of what is a nominee and who can be appointed as a nominee, let’s take a look at the benefits of appointing a nominee in bank:
Seamless Fund Transfer
When you open a bank account it is most likely that you have all the savings of your life deposited in your bank account. Appointing a nominee is like an assurance that even in your absence, your funds are seamlessly transferred to the person whom you trust and want to give your money to.
Reduced Legal Difficulties
Failing to appoint a nominee can create several legal issues, not just with the bank but even in your family. Remember that if you don’t appoint a nominee to obtain the funds, you may require a court order. Therefore, appointing a nominee ensures that in your absence, your loved ones do not have to deal with these hassles.
Easy Access to Funds
If, due to an unfortunate event, you are not around and your loved ones have to take care of immediate expenses like medical emergencies, college fees, funeral expenses, etc., obtaining funds from your bank account becomes easier for them if they’re appointed as a nominee.
Remember that when you’re appointing a nominee, it is important that you abide by certain rules that include:
Individual Nominee
A simple rule for appointing a nominee is that you can appoint an individual nominee for one bank account. However, make sure to cross-check whether your bank allows more than one nominee. Additionally, remember that you can have different nominees for your bank accounts.
NRI Nominee
If you want to appoint any non-residential Indian (NRI) as a nominee for your bank account you can easily do so. However when it comes to transferring funds in case of your absence, the nominee might need to take clearance from the Reserve Bank of India.
Minor as a Nominee
As discussed above, even a minor can be appointed as a nominee if there is a designated guardian. Once the minor reaches the age of 18 years they automatically become legally entitled to the funds in case of your absence. In addition to this any individual who has been illegally appointed to handle your bank account on behalf of a minor also has the right to appoint any other guardian to represent the minor.
Now that we have discussed the benefits of appointing a nominee for your bank account you must have already understood that nominee is of great importance and therefore you must carefully choose whom you want to appoint.
The Reserve bank of India has time and again produced documents and proof where crores of funds are rotting in bank accounts simply due to lack of nominees.
Since the appointment of a nominee for your bank account is a super easy process and it is suggested that you must appoint a nominee, at the time of filling the bank application form.
It is quite common for many of us to get confused between a nominee and a legal heir. In a nutshell it can be said that a nominee in a bank account is basically a person who has been appointed to receive the funds in the concerned bank account whereas a legal heir is a person who has the right to all the assets of the deceased as per the will or inheritance laws.
To make the differences even clearer, here’s a comparison table between a nominee in legal heir:
Aspect | Nominee in Bank Account | Legal Heir |
Definition | A nominee in a bank account is the person you have appointed to receive the funds in your bank account in case of your death. | A legal heir is the person who is legally entitled to your assets as per the will you have made or the inheritance laws. |
Right to funds | A nominee does not have any right to funds or assets beyond what is in the concerned bank account. | A legal heir has rights to all your funds and assets. |
Purpose | A nominee is appointed as a trustee to manage the funds in the bank account. | A legal heir is a person who owns and manages all the assets in case of your death. |
Legal Competence | A nominee has rights over the funds in the bank account, but their rights can be overridden by that of a legal heir. | A legal heir has been granted rights by the Indian laws of succession and inheritance. |
Flexibility | A nominee can be any person with whom you have a fiduciary relation and is competent to become a nominee | A legal heir is a family member as defined by inheritance and succession laws. |
Bank Procedures | A nominee has direct rights over the funds in your bank account. | A legal heir would require a probate by court to claim assets or funds |
Conflict Potential | Once a nominee is appointed, the transfer of funds in your bank account becomes conflict-free. | If you have failed to create a will before your death, your assets and funds are transferred according to inheritance or succession laws, which might lead to legal conflicts. |
In case you have failed to appoint a nominee for your bank account, your legal heirs will have to take permission from the court by proving beyond reasonable doubt that they are legally entitled to the funds in your bank account. Remember that the court has the authority to decline the claims made by your legal heirs if it is not satisfied by the submissions made.
Let’s say that you have opened a bank account but have failed to appoint a nominee or you wish to change the nominee you appointed at the time of opening the bank account. Both these options are available to you, here’s how:
Online Method:
Visit the official website of your respective bank and login into your account.
Find and select the option similar to “Account Services” and you will be able to find a “Update Nominee” option.
From here you have to fill in the details of your bank account like bank account number name, IFSC code etc.
In the next step, select an option similar to “Add A New Nominee” or “Change Nominee” to generate a request.
Once you have submitted the request the bank will verify and update the same.
Offline Method
Visit the nearest branch of your respective bank.
Speak to a representative and ask for an application form to change or update the nominee.
Fill in the application form with relevant details like bank account number, name, IFSC code et cetera and details of the nominee.
Once you have submitted the form the bank will verify and update the same.
A nominee in a bank account is of vital importance to ensure that the funds are seamlessly transferred in your absence. Remember that while you have the option to appoint any person as a nominee (competent to become a nominee), you must appoint a person with whom you have a fiduciary relation to avoid any conflict in future. If you have not appointed a nominee yet, visit the official website or nearest branch of your respective bank and generate a request.
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This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
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A nominee in a bank account is the person appointed by the bank account holder to receive and transfer funds in the bank account in the absence of the bank account holder due to any unfortunate event like death.
In any case the bank account holder dies without appointing a nominee or leaving behind any instructions, the funds can be claimed by legal heirs after receiving a permission from the court.
In most cases, banks allow you to appoint only a single nominee for your account. This is done to avoid conflict in future. However, you are allowed to appoint different nominees for different bank accounts. In case your bank allows more than one nominee, you will be asked to fill in the details of multiple nominees.
Yes, you can change the nominee after you have already mentioned it. You can either visit the official website or nearest branch of your respective bank to fill in an application form to generate the request. Once you have submitted the request, the bank will verify and approve your request.
Yes. You can appoint a friend or any person legally competent to be appointed as a nominee. A minor can be appointed as a nominee provided that there is a competent guardian to hold the account on behalf of the minor till the time the minor attains 18 years of age.
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