What Is a Nominee in a Bank Account? An Informative Guide

Nominee is a common term that you will come across while opening a new bank account. Understanding the meaning of nominee in banking is crucial. Whenever you open a bank account or apply for a fixed deposit, there’s a section to add your nominee’s name.

Even though it is an optional step, having a nominee helps in various ways. To understand what a nominee is and why nominees are essential for any bank work, continue to read on.

Meaning and Role of Nominee for Bank Account

The meaning of nominee in banking refers to an individual who will be appointed as the beneficiary of the account holder. On the demise of the account holder, the nominee will be entitled to receive the sum linked to the account holder’s account. 

However, the nominee has to provide their ID, bank name and account details to receive the money. If the nominee has been mentioned, there will be no succession certificate or court order requirements. 

Appointing a nominee helps ensure that family members or dependents get funds into your bank account easily. Without a nominee, legal heirs may face challenges in claiming funds, leading to potential disputes and delays. 

Who Can Be Your Nominee for Bank Account?

While selecting your nominee, you can choose anyone you prefer. But you need to mention the relationship with nominee and the account holder. A nominee can be one of the following:

• Your child
• Your spouse
• Your partner
• Your sibling
• Any other family member or friend

Read Also : How to Get a Bank Statement?

Essential Rules for Choosing a Nominee

Now that you know what a nominee is, there are some rules for a bank account nominees that you must follow during the process. These include:

• You can appoint one nominee per bank account, but if you have multiple accounts, you can designate different nominees for each.
• You need to provide all the nominee details, like:

1. Name
2. Age
3. Address
4. Relationship with nominee

• You can change a nominee, and if it’s a joint account, both account holders must approve any changes regarding the same.
• Nominees cannot claim the funds themselves if they are not legal heirs. Instead, they act as trustees and must pass the funds on to the legal heirs.
• If the nominee is a minor, you must also appoint a guardian. If the account holder dies while the nominee is still a minor, the bank will release the funds to the guardian.
• You can also choose a Non-Resident Indian (NRI) as your nominee. The bank will transfer the funds abroad once it gets the required approvals from the Reserve Bank of India (RBI).

Difference Between Rightful Heir and Nominee

There is a slight difference between the meaning of nominee in banking and your rightful heir. Check the table below to understand the essential differences:

Parameter	Nominee	Legal Heir
Meaning	It denotes the person nominated by the deceased account holder.	It refers to the successor named in the deceased’s legal will or testimony.
Role	This individual will act as a trustee holding the assets of the deceased.	The individual will be the beneficiary of the deceased.
Indicates	The nominee will receive the amount.	The rightful heir can use the amount.
Determined by	The deceased will determine who gets to be the nominee.	The will or the legal proceeding will decide who will be the rightful heir.

If you are building wealth and maintaining assets during your lifetime, you can secure the future of your rightful heir by learning all about this process. The nominee will ensure that your rightful heir receives your savings/wealth. However, your nominee and rightful heir can also be the same person.

FAQs on Bank Nominee

What is a nominee?

A nominee is the beneficiary of the account holder. On the demise of the account holder, the nominee will be entitled to receive the sum linked to the account. 

How many nominees can I appoint for my bank account?

You are entitled to nominate only one person while you open your account. However, if you have multiple accounts, you can assign different nominees to each one. You can also add details or modify the name at any point.

Can I change my nominee after I have already mentioned it?

Yes, you are entitled to change the nominee details at any point. You can use a form for this purpose at a bank branch or make the changes online via net banking or the mobile app.  

Can I make a friend a nominee to my bank account?

You can choose your family members, friends or anyone you trust as your nominee. You must rely on them as they will be entitled to hand over the amount to your rightful heir.

Can a minor be appointed as a nominee?

Yes, you can also name a minor as your nominee. However, ensure you appoint a guardian if the nominee is a minor. In case of demise of the account holder’s death, while the nominee is still a minor, the bank will transfer the funds to the guardian.