New bill proposes multiple nominees for bank Fixed Deposits to ease fund distribution after death
FDs) after the death of the prime earner, who, in many cases, was the sole account holder.
The bill to change the law allowing banks to let a depositor specify multiple nominees and their shares for easier distribution of funds later is expected to come up during the winter session of the Parliament which begins today. The Bill, which was introduced in the last session, has been listed again.
Under the proposed amendment, banks would allow up to four nominees (against the current practice of one). This could be either 'simultaneous nomination', where the percentage shares of different nominees are stated in the nomination form, or 'successive nomination', where there is one actual nominee at any given time and on whose death another nominee becomes effective.
In a simultaneous nomination arrangement, on the death of the account holder, nominees can claim the money in the account according to their respective shares as originally laid down by the depositor. This could make the settlement of claims and distribution of money to the heirs easier.
Amid high morbidity caused by the pandemic, the idea to simplify joint ownership and nomination rules for various financial assets, was broached by Pramod Rao (the current Sebi whole-time member) in an article during his days as a banker with ICICI.
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