contact.paisamarket@gmail.comUpdated: September 2026 | Covers current nomination rules for bank accounts, FDs and mutual funds under RBI and SEBI guidelines.
A nominee is the person you name to receive the money or units from your bank account, fixed deposit or mutual fund if you pass away.
The nominee does not become the owner of the money. He or she only receives it as a trustee and must hand it over to the legal heirs as per the will or succession laws.
Nomination makes the claim process faster and simpler for your family. Without a nominee, legal heirs usually need a succession certificate or probate, which takes more time and paperwork.
Bottom line:
Nominee = Facilitator (gets the money quickly)
Legal Heir = Actual owner (has the real right over the money)
Table of Contents
What is a Nominee? (Simple Definition)
A nominee is a person you officially name in your bank account, fixed deposit, mutual fund or other financial product so that the institution knows whom to hand over the money or units to after your death.
Think of the nominee as a trusted receiver or caretaker. The bank or mutual fund will release the amount to this person quickly. However, the nominee does not become the permanent owner of that money. He or she is expected to pass it on to the actual legal heirs according to your will or the succession laws.
In short:
Nominee = Person who receives the money first
Legal Heirs = Persons who finally own the money
Who Can Be Made a Nominee?
You can nominate any individual. Most people choose:
- Spouse
- Children (son or daughter)
- Parents
- Siblings
- Any other relative or even a trusted friend
Important points:
- Only individuals can be nominees. You cannot nominate a company, trust, society or HUF.
- A minor can be made a nominee. In that case, you must also appoint a guardian who will act until the minor becomes 18.
- You can nominate the same person across all your accounts or different persons for different accounts/FDs/folios.
- Under current rules, banks allow up to 4 nominees and mutual funds allow up to 3 nominees.
Why Nomination Is Important
Nomination is one of the simplest steps you can take to protect your family. It speeds up claim settlement after death and avoids long legal procedures. It also reduces the chances of family disputes because the bank or mutual fund knows exactly whom to contact first.
Nomination works even if you have not made a will. The process is free and easy to register. Most banks and mutual fund houses now allow you to add or change a nominee online as well.
Having an updated nominee is one part of protecting your family. Pair it with a ready emergency fund so that immediate expenses can be met while claims are processed — see our guide on how much emergency fund you need and where to keep it
Nomination in Bank Accounts (Savings & Current)
Key Rules
Under the Banking Companies (Nomination) Rules, 2025 (effective from 1 November 2025) and the corresponding RBI Directions, you can nominate up to four persons for a deposit account. You can choose simultaneous nomination (with percentage shares) or successive nomination (in order of priority).
Nomination is available for both single and joint accounts. In joint accounts, the nomination usually becomes effective only after the death of all account holders, depending on the mode of operation (either or survivor, joint, etc.).
How to Add or Change Nominee
Visit the branch with your account details and the nominee’s full name, relationship, date of birth, address and percentage share (if multiple). Fill the nomination form (commonly Form DA-1).
Many banks now allow online nomination through net banking or the mobile app. After submission, collect or download the acknowledgement. Keep this acknowledgement safely.
What Happens After Death
The nominee can claim the balance by submitting the death certificate, claim form, identity proof and other documents required by the bank. The bank pays the amount to the nominee. The nominee is legally bound to distribute it to the rightful legal heirs according to the will or succession law.
Nomination in Fixed Deposits (FDs)
Important Points
You can make a nomination at the time of opening the FD or later. Each FD receipt or account can have its own nomination. Under the updated rules, one FD can have up to four nominees with specified percentages.
Practical Tips
Always mention the percentage share if there are multiple nominees. Keep the nomination updated after major life events such as marriage, divorce or the birth of children. Most banks print “Nomination Registered” along with nominee details on the FD receipt or advice.
Claim Process
The process is the same as for a savings account: death certificate + claim form + KYC documents of the nominee. The bank releases the maturity amount or balance to the nominee, who then holds it for the legal heirs.
Nomination in Mutual Funds
SEBI Rules (Simplified)
Under the revised SEBI norms (effective from 1 September 2026), every single-holder mutual fund folio should have a nominee unless the investor formally opts out. You can nominate up to three persons and specify the percentage share for each.
Nomination can be done online through the AMC website, app, MF Central, CAMS or KFintech. Fresh nomination or change is possible at any time.
Special Features in Mutual Funds
The nominee gets the units transferred to his or her demat account or statement of account. The nominee can redeem the units or continue the investment. If no nominee is registered, transmission to legal heirs requires additional documents such as a will, succession certificate or legal heir certificate.
How to Check Existing Nominee
Log in to your mutual fund account on the AMC website, MF Central or the registrar’s portal and check the nominee section. It is a good habit to verify this at least once a year.
Nomination in Other Popular Products (Quick Overview)
| Product | Max Nominees | Key Point | Governing Body |
|---|---|---|---|
| Bank Account & FD | Up to 4 | Simultaneous or successive nomination allowed | RBI |
| Mutual Funds | Up to 3 | Mandatory for new single-holder folios (unless opt-out) | SEBI |
| Demat Account | Up to 3 | Similar rules as mutual funds | SEBI |
| Life Insurance | Usually 1 or more | Nominee can become absolute owner in many cases (especially spouse/child/parent) | IRDAI |
| PPF | 1 | Nominee gets the amount; legal heirs still have rights | Govt rules |
| EPF / EPS | As per form | Separate nomination form (Form 2) | EPFO |
| NPS | As per rules | Nomination is mandatory | PFRDA |
Note: Rules for insurance are slightly different — in many cases the nominee (especially immediate family) gets stronger rights.
Nominee vs Legal Heir – The Most Important Difference
| Point | Nominee | Legal Heir |
|---|---|---|
| Who is it? | Person named by you | Person entitled under law/will |
| Gets the money? | Yes (from bank/AMC) | Ultimate owner |
| Becomes owner? | No | Yes |
| Can keep the money? | No (must give to legal heirs) | Yes |
| Claim process | Simple & fast | Can be lengthy if no nominee |
Key point: Nomination does not override the rights of legal heirs. It only helps in quick transfer of the amount to a trusted person who then has the responsibility to pass it on to the rightful heirs.
Nomination vs Will – Which One is Stronger?
Many people get confused between nomination and a will. Here is the clear difference:
| Aspect | Nomination | Will |
|---|---|---|
| Purpose | Quick transfer of money from bank/AMC | Decides who finally owns the assets |
| Who gets ownership? | Nominee (only as trustee) | Beneficiaries named in the will |
| Speed | Very fast | Can take time (probate may be needed) |
| Legal strength | Does not override succession law | Stronger for deciding ownership |
| Is it compulsory? | Recommended but not mandatory | Not compulsory, but highly advisable |
Simple rule:
Nomination helps your family get the money quickly from the bank or mutual fund.
A will decides who should finally keep that money.
Best practice is to have both — a nomination for speed and a will for clarity of ownership.
Rights and Duties of a Nominee
Rights of a Nominee:
- Right to claim and receive the money or units from the bank/mutual fund after the account holder’s death.
- Right to get the amount transferred without producing a succession certificate (in most cases).
Duties of a Nominee:
- The nominee holds the money only as a trustee.
- He/she must distribute the amount to the legal heirs as per the will or succession laws.
- The nominee cannot treat the money as his/her personal property.
If the nominee refuses to hand over the money to the legal heirs, the legal heirs can take the matter to court. Courts have consistently held that nomination does not give ownership rights.
Can a Nominee Keep the Money? What If He Refuses to Give to Legal Heirs?
No. The nominee cannot legally keep the money as personal property.
If the nominee refuses to distribute the amount to the legal heirs, the legal heirs can:
- Send a legal notice to the nominee
- File a case in the appropriate civil court
- Claim their rightful share as per the will or succession laws
Indian courts have repeatedly held that a nominee is only a trustee and not the owner. The bank is discharged once it pays the nominee, but the nominee remains accountable to the legal heirs.
Multiple Nominees & Percentage Share
You can nominate more than one person. Clearly mention the percentage (for example, Wife 60%, Son 40%). If percentages are not mentioned, banks and mutual fund houses usually distribute the amount equally among the nominees.
Specifying percentages in advance avoids confusion and possible disputes later. Under current rules, banks allow up to four nominees and mutual funds allow up to three.
Special Cases You Should Know
1. Minor as Nominee
You can nominate a minor. Appoint a guardian (usually a parent or close relative). The guardian will manage the money until the minor turns 18.
2. NRI Nominee
An NRI can be made a nominee. However, the bank may ask for additional documents (passport, OCI/PIO card, etc.) at the time of claim. Repatriation rules will also apply if the money needs to be sent abroad.
3. Joint Accounts
In joint accounts, nomination usually becomes effective only after the death of all joint holders (especially in “Either or Survivor” mode). Check your account operating instructions.
4. HUF Accounts
Nomination facility is generally not available in the same way for HUF accounts because HUF is not treated as an individual.
5. Sole Proprietorship Accounts
These are treated as individual accounts, so nomination is allowed.
Common Mistakes People Make
Many people do not register any nominee at all. Others keep an old nominee even after marriage or major family changes. Some write only the first name without full details or relationship.
A frequent misunderstanding is assuming the nominee becomes the absolute owner of the money. Another common error is forgetting to nominate separately in every FD and every mutual fund folio. Finally, many people never inform the nominee that he or she has been named.
How to Add, Change or Cancel Nominee – Step-by-Step
Bank Account & FD
- Download or collect the nomination form from the bank.
- Fill in the nominee’s complete details and your signature (all joint holders must sign in case of joint accounts).
- Submit it at the branch or complete the process online if your bank offers e-nomination.
- Collect or save the acknowledgement.
Mutual Funds
- Log in to the AMC website, MF Central or your distributor platform.
- Go to the nomination or profile section.
- Add or modify nominee details and percentage shares.
- Authenticate with OTP or e-sign and save the confirmation.
You can cancel or change a nomination at any time by following the same process.
What Happens If There Is No Nominee
Legal heirs have to submit more documents — death certificate, legal heir certificate, succession certificate or probate of will, indemnity bond, and sometimes no-objection certificates from other heirs.
The process takes longer, often several weeks to months. There is also a higher chance of family disputes when the bank or mutual fund does not know whom to contact first.
Detailed Claim Process After Death (Step-by-Step)
When there is a nominee:
- Nominee collects the death certificate (original + copies).
- Fills the bank’s/AMC’s claim form.
- Submits KYC documents (Aadhaar, PAN, cancelled cheque, etc.).
- Bank/AMC verifies the documents.
- Amount is transferred to the nominee’s account (usually within 15–30 days if papers are in order).
When there is no nominee:
- Legal heirs need death certificate + legal heir certificate / succession certificate / probate of will.
- Indemnity bond and no-objection from other heirs are often required.
- Process takes longer (several weeks to months).
Practical Checklist for Readers
- Check nomination status in all bank accounts
- Check nomination in every fixed deposit
- Check nomination in all mutual fund folios
- Update nominee after major life events (marriage, divorce, birth of child, death of earlier nominee)
- Inform the nominee that he or she has been named
- Keep percentage shares clearly mentioned
- Store nomination acknowledgements safely (digital + physical)
Frequently Asked Questions
Can a minor be made a nominee?
Yes. You can nominate a minor. In that case, you should also appoint a guardian who will act on behalf of the minor until he or she becomes an adult.
What is the difference between nominee and joint holder?
A joint holder is a co-owner of the account while alive. A nominee comes into the picture only after the death of the account holder and acts as a trustee for the legal heirs.
Can I nominate different persons for different FDs?
Yes. Each FD can have its own separate nomination. You are free to choose different nominees or different percentage shares for different deposits.
Does nomination in bank account cover locker also?
No. Locker nomination is separate. You need to fill a different form for the safe deposit locker.
Who gets the money if the nominee dies before the account holder?
If the nominee dies before the account holder and no alternative or successive nominee is named, the nomination becomes ineffective. The amount then goes to the legal heirs through the normal claim process.
Is nomination compulsory in mutual funds now?
For new single-holder mutual fund folios (from 1 September 2026), nomination is mandatory unless you formally opt out by submitting a declaration. For jointly held folios, nomination remains optional.
Can legal heirs claim the money even if there is a nominee?
Yes. Legal heirs have the ultimate right over the money. The nominee receives it only as a trustee and must pass it on to the legal heirs according to the will or succession law.
How many nominees can I add in a mutual fund folio?
You can add up to three nominees in a mutual fund folio and specify the percentage share for each.
Closing
Nomination is one of the simplest yet most powerful tools to protect your family’s financial future. It does not cost anything and takes only a few minutes.
Make sure every bank account, fixed deposit and mutual fund folio has an updated nominee. Doing this today can save your family from unnecessary stress, delays and possible disputes later. Take out a few minutes this week, check your nominations, and update them wherever needed.
