IMPORTANCE OF NOMINATION IN BANK'S DEPOSIT ACCOUNTS
It is a facility issued by all the banks to their customers in all the accounts opened by them.Nomination means the facility to chose or declare to the bank that in the event of his/her death who is going to be the beneficiary of the death claim i.e, the entire amount lying in his any deposit accounts such as Saving Bank account, Current account (only in case where the constitution of the firm is propreitorship that is only one person running the firm and sharing 100 % profit earned or loss incurred from the business), fixed deposits or recurring deposit and last but not the least the safe deposit lockers hired by a customer. The heads can further be elaborated as below :
1. Nomination in case of a savings account :
Nomination is intended to be made in case of the savings account while filling up the Account Opening Form. There is one DA1 form attached with the account opening forms mostly in all the banks and if it is not there, a separate DA1 form needs to be filled by the customer and attach the same with the a/c opening form.
Earlier it was not essential for everyone to fill up the nomination form but in this regard a circular of Reserve Bank Of India(RBI)has been issued dated april 5, 2007 wherein banks were advised to give wide publicity and provide guidance to deposit account holders on the benefits of nomination facility and the survivorship clause. It is of great benefit to the customers since it reduces many big hassles while settlement of the death claims that is customers deposits with the bank in the event of the death of the customer like asking for the court notice along with the declaration from the local municipal councillor and letter from the court that the person appearing before the bank and posing himself as the legal heir of the deceased customer is the real one and the proceeds of the account may therefore be handed over to them after proper verification. In case of a joint account, the customer is not insisted to give the nomination as the amount can be settled in the name of his co holder in case of the death of one of the holders.
However, if the customer is unwilling to give the nomination after all efforts or if there is not a single alive person in his family or if he/she is a damsel, the bankers might open his account after taking in writing that he doesn't want to nominate any one for any of his accounts.
2. Nomination in case of a Fixed Deposits :
It is term deposit which the bank needs to pay to the customer after the end of the term chosen by the customer with the addition of fixed rate of return commited by the bank to the customer while filling up the Term Deposit Form.
In a case which came up before the Allahabad High Court, the Honourable Court has observed that "it will be most appropriate that the Reserve Bank of India issues guidelines to the effect that no Savings Account or Fixed Deposit in single name be accepted unless name of the nominee is given by the depositors. It will go a long way to serve the purpose of the innocent widows and children, who are dragged on long drawn proceedings in the Court for claiming the amount, which lawfully belongs to them".
3. Nomination in case of a Recurring Deposits :
Nature of fixed deposits and the recurring deposits are same as both are liabilities for the bank and have to be paid back after the commited time at the commited rate of interest. The only difference is that in Fixed deposits, the amount is deposited by the customer at one go while in case of the later, the amount is deposited on equal interval of time that is monthly, quarterly, halfyearly etc.Nomination in case of these accounts is again a must and is helpful for both the parties that is the bank and the claimant.
4. Nomination in case of a Current Account( Proprietorship Concerns only) :
The RBI has suggested further, that the banks may refer to circular dated February 28, 1997 wherein it was advised that the nomination facility could also be extended in respect of deposits held in the name of a Sole Proprietary Concern. Banks are also advised to follow the procedure outlined above in respect of deposit accounts in the name of Sole Proprietary Concern.
5. Safe Deposit Lockers :
It is a facility extended by the bank to their customers depending on the availability, where a locker agreement is signed on the stamp paper in the language vetted by the legal department of the bank. The above two are in the relationship of a lesser and a lessee and customers are expected to keep only acceptable items such as jewelleries, property papers or any other important documents pertainig to them and not any unacceptable items such as bombs or wrotten fishes which could further create panic for the bank and the other customers walking into the branch.
In case of first three types of deposit accounts, DA1 form is filled for nomination, DA 2 for cancellation of nomination and DA3 for cancellation of old nomination and declaration of the new one, while in case of Safe Deposit lockers, SL1 form is there for nomination in case of sole hirer of the locker while SL1(A) for the joint hirers.