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Banks to ask for Nomination Facility in Single Deposit Accounts

In a notification dated 5th April 2007, Reserve Bank of India has advised banks to generally insist that the person opening a deposit account makes a nomination. In case the person opening an account declines to fill in nomination, the bank should explain the advantages of nomination facility. If the person opening the account still does not want to nominate, the bank should ask him to give a specific letter to the effect that he does not want to make a nomination.

In case the person opening the account declines to give such a letter, the bank should record the fact on the account opening form and proceed with opening of the account if otherwise found eligible. However, under no circumstances, a bank should refuse to open an account solely on the ground that the person opening the account refused to nominate.

This notification has been issued in view of the observations of Allahabad High Court 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"

Further, RBI has reitrated that the nomination facility could also be extended in respect of deposits held in the name of a Sole Proprietary Concern.

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