Understanding Fixed Deposit Nomination Rules and Process

Have you ever considered who will manage your Fixed Deposit investments if something unexpected happens to you? At the time of FD account opening, you can add nominee against your FD to ensure the money is passed on to the beneficiary upon your demise. In this blog, we have explained the importance of FD nomination and how it can financially safeguard your family after you're gone.

Fixed Deposit Nomination: The Role of a Nominee

When you open a Fixed Deposit account, you have the option to nominate someone who will receive the proceeds of the FD in case of your death. A nominee acts as a custodian for the fixed deposit funds. Their role is to ensure that the money is handed over to the legal heir of the depositor. 

Kindly note that in certain instances nominees can also be legal heirs. Basically, although a nominee might sometimes be the same person as the legal heir, they do not actually own the funds.

Fixed Deposit Nomination: How Many Nominees Can One Choose?

Generally, you can select one family member as a nominee per account. You can do this at the time of account opening. It's always recommended to appoint a nominee so that the deposit amount doesn't remain unclaimed in the bank.

How to Appoint a Nominee Online?

You can follow the below steps while opening an FD account online

Step 1: Fill out the nomination form when opening an FD account

Step 2: Provide details like nominee name, relationship, and date of birth of the nominee

Step 3: Keep this information updated as per any changes in your preferences or circumstances

Once you complete the account application process, your nominee details will be processed. Your FD account will be transferred to the nominee upon your demise. 

Who Can Be a Nominee?

• Family members
• Friends
• Charities (in specific cases)

Importance of Fixed Deposit Nomination

The importance of nominating individuals for your fixed deposit accounts cannot be overstated. Let's take a closer look at why FD nomination is crucial:

1. Seamless Transfer of Funds

By nominating someone, you ensure that your hard-earned savings are seamlessly transferred to your loved ones. This helps avoid any potential conflicts or delays in accessing the funds.

2. Protection of Your Legacy

FD nomination safeguards your legacy. It ensures that your savings are utilised as per your wishes and benefits the individuals you intend to support.

3. Ease of Access

Nomination simplifies the process for your legal heirs to access the funds in your FD account. They can avoid lengthy legal procedures and documentation, making a difficult time slightly easier for them.

4. Avoidance of Disputes

Fixed deposit nomination helps prevent disputes among family members regarding the distribution of assets. It provides a clear roadmap for the transfer of funds and reduces the chances of conflicts arising.

Fixed Deposit Nomination: Key Tips for Appointing a Nominee

Appointing a nominee for your fixed deposit account is a simple process. Here are some important points to keep in mind: 

1. Individual or Joint Account Holders

• Individual, single, or joint account holders can appoint a nominee.
• However, entities such as Hindu undivided families, trusts, and societies cannot appoint nominees.

2. Nominee Must Be an Individual

The nominee must be an individual, not an entity. This ensures that there is clarity regarding ownership and distribution of funds.

3. Appointing Nominee at the Time of Investment

• It is advisable to appoint a nominee at the time of opening the fixed deposit account
• Most banks provide a column on their application forms to fill out the nominee details.
• However, if you didn't appoint a nominee initially, you can still do so at a later date by submitting relevant application forms to the bank.