Let’s dive into the nitty-gritty of nomination and learn about it so you can take a wise decision about your nomination.
What is a nomination?
Nomination is nothing but a service that offers account holders a chance and an opportunity to appoint a person who can claim the account after the demise of the account holder. The most important part of the nomination facility is that if the account holder passes away, the bank can transfer all the proceedings and the money to the nominee without tedious applications like Succession Certificate, Administration letter, or court order.
Even if the nomination facility is not mandatory for account holders, it is highly recommended that people have a nominee for their account as it is the wisest thing to do. It is the easiest way to get rid of all the hassles of legal heirs in the settlement process in the event of the demise of the account holder.
Is having a nominee compulsory?
No, having a nominee is not compulsory for any type of account – savings or current. If you don’t want to nominate anyone in your accounts, then you can simply mention that you don’t want to nominate anyone.
But given how unpredictable life is, it is always recommended and advisable to have a nominee for your accounts. It makes settling claims, gaining the saved money, and other investments easy. Also, make a note of this, a nominee is nothing but a trustee of your assets and they can in no way whatsoever take away the rights of your legal heirs on your financial assets.
Who can nominate?
All the account holders can have a nominee. Whether it is a savings bank account or a current bank account, you can have a nominee.
A sole proprietor can select a nominee for the sole proprietorship account. If a savings bank account is opened for a minor, then the responsibility of selecting a nominee falls on a lawfully entitled person to choose on the minor’s behalf.
Please note that you cannot have multiple nominations for single or joint deposit accounts. You should always remember that there can only be one nominee in the case of bank accounts.
You can open current account online or offline. There are 4 types of current accounts – Proprietorship, Partnership, Private Limited and Public Limited Companies. In India, you get nomination facility only in Proprietorship current account.
When it comes to Mutual Funds & PPF, you can have multiple nominees. You get an option for appointing a specific nominee for an account. To put it simply, if you have different accounts like a savings bank account, recurring deposit, or fixed deposit in the same bank, then you can allocate different nominees for them.
The best part about the nomination is that you don’t have to only nominate from your family. The person you are nominating may or may not be related to you. They can be your relative, an acquaintance or even friends.
