Thursday, December 13, 2012

Have you made nomination for your bank account?

- Balwant Jain, CFO, Apnapaisa.com
I recently read a news item on the  referring to the answer given in the Parliament on the question of   unclaimed money is lying with the Indian Banks as on December, 2011.  It amounted to whopping sum of approx. Rs. 2481.39.cr. I could not stop myself relating to the death of my friend’s family member who had missed on making nomination in his salary account.
. The said  report stated  that  a major portion of this unclaimed money belongs to 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 the 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..
What is the process involved?
You can file a request for nomination of a single account as well as for 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 the joint account holders. This form is applicable for all types of bank 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. Even if you fail to submit the form at the time of opening the bank account, the above nomination facility can be availed any time later on  by submitting the above form to your bank.
If  you wish to modify the existing nomination, you can do so by submitting Form No. DA-3. The nomination once submitted can be cancelled later on  simply by submitting Form No. DA-2. Even while canceling any nomination, 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 modification can be made as many times as you want by filling simple forms available with the bank. It is important  to obtain a written acknowledgement of any request made to the bank whether of nomination, cancellation or variation thereof. The banks normally give acknowledgement in a tear-off of the form being submitted.
You must keep photocopies of the forms in respect of nominations submitted 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 is any  deletion or addition to the original bank account, ensure that the nomination form is also filed with the bank signed by all the account holders at the relevant time.
Who  can  make the nominations?
Nomination facility is available in case of individuals only, and not 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, 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 nominated a minor and the minor has become a major, the minor who has meanwhile become major can claim the money from the bank himself.
In case any  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. Like the bank accounts, you can file nomination  for your lockers with the banks as well so that in case anything happens to you, the nominee can claim the contents of the locker from the bank.
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 along 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, the legal heirs can restrain the bank  from paying the money to the nominee.
What are you waiting for?
Nominate your near and dear ones to ensure that the money in your bank account does not remain unclaimed after your death. Even in case of saving bank account where the amount maintained is generally not substantial, please  submit nomination forms because you never know that something may happen to you when the balance in the saving bank account is temporarily very high.


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