In this article, let’s take a look at the meaning of the word nominee. If you have ever filled out the form to apply for a bank account, you will have seen this term. A nominee is an individual or entity designated to receive assets, benefits, or rights on behalf of another in the event of the latter’s absence, incapacity, or death. In various contexts, such as insurance policies, financial accounts, or legal documents, nominating a person as a nominee ensures a smooth transfer of assets or responsibilities. The nominee acts as a representative to safeguard the interests and execute the wishes of the original account holder or policyholder in their absence.
Nominee meaning describes the person who has the authority to claim the deposit or an investment that is in someone’s account. According to the RBI, thousands of crores of funds sitting in bank accounts have been unclaimed due to a lack of nominee mention. It becomes applicable in case the original owner of the asset or account passes away. Hence, providing a nominee to your bank is advisable.
Certain banks permit applicants to list multiple nominees and allocate a percentage to each. In the absence of a specified proportion, the bank distributes the funds evenly to each nominee.
Things You Should Know About Nominations
- There are key differences between a bank nominee and a legal heir. For one, a bank nominee is only the custodian of the bank account he/she is a nominee of. On the other hand, a legal heir is the successor whose name is mentioned on a will. If the name of a nominee is not given, the legal heirs must go through the process to get the money out of the account.
- An individual resident may also designate an NRI as the nominee. However, the funds will only be repatriated along with the RBI’s approval.
- In the event of death, having a nominee listed can make the transfer of the person’s assets much easier.
- You can change the nominee’s name on your bank account by contacting your bank.
Requirements To Be Listed as a Nominee
- The nominee will not be eligible to receive the money if they are not the legal heir.
- A minor can also be named as the account nominee. To do so, a guardian must do it on the minor’s behalf. Additionally, the funds must be transferred to the guardian for safekeeping.
- A person who is legally permitted to handle a minor’s account may also submit the nomination on the minor’s behalf.
. A nominee, in financial and legal realms, is an individual or entity appointed to represent someone’s interests or receive assets in their absence. This designation ensures a smooth transition of rights or responsibilities based on the nominator’s wishes. On the other hand, know what is RTGS, or Real-Time Gross Settlement, is a financial transaction system facilitating instantaneous and individual fund transfers between banks. Unlike net settlement systems, RTGS processes payments in real time, making it ideal for high-value and time-sensitive transactions. Together, these concepts underscore the importance of efficient and secure mechanisms in both personal representation and financial transactions, highlighting the need for seamless processes in various aspects of modern life.
CONCLUSION
Knowing the meaning of a nominee and the importance of giving one to your bank is extremely important. It ensures that there are no issues with the handling of a person’s bank account if they were to pass away. If the name of a nominee is not given, the legal heirs might struggle or be delayed in gaining access to the bank account. Past evidence is enough to suggest that it is always wise to have this aspect of your financial management covered.
