When a family member passes away leaving behind a fixed deposit (FD) without a nominee, a common concern arises, will the money remain stuck in the bank, and will the family have to go through a long legal process to claim it? Banking regulations make it clear that an FD can still be claimed even if no nominee was registered, provided the required rules are followed and documents are in order.
Every year, banks hold large amounts of unclaimed deposits, often because families are unaware of the correct process. Understanding the distinction between a nominee and a legal heir is crucial in such cases.
A nominee is a person appointed by the account holder to receive the deposit amount after their death. However, a nominee is not the actual owner
of the money. The nominee is only authorised to collect the funds from the bank, while the legal ownership rests with the rightful heirs as determined by inheritance laws. BankBazaar CEO Adil Shetty explained that the nominee has the right to withdraw the money from the bank, but the final claim to the funds lies with the legal heirs, such as the spouse or children.
If an FD holder has not registered a nominee, the bank usually asks for a death certificate and proof of legal heirship before releasing the amount. The presence of a will makes the process smoother and faster. In cases where there is no will, known as intestate death, the spouse and children are generally treated as the primary heirs. The bank may require documents such as a succession certificate issued by a civil court or a legal heir certificate from the local revenue authorities to process the claim.
Delays in receiving the deposit amount often occur due to the absence of a nominee, errors in KYC details, disputes among family members, or incomplete documentation. Financial experts say that regularly updating nomination details and preparing a valid will can help families avoid such complications later.
Nomination details in an FD can be updated easily. Customers can do it through mobile banking by accessing the deposit section, selecting the nomination update option, and entering the new nominee’s details for confirmation. Alternatively, they can visit their bank branch, fill out the nomination form, and submit it along with identity proof to update the records.
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