In our country, individuals save and invest money in a range of financial products. For example, people diligently save their hard-earned money via Savings Bank Account, Fixed Deposit (FD), Recurring Deposit (RD), Employee Provident Fund (EPF), etc, while investing their money in mutual funds to get attractive returns over time. You must be using one or more of these financial products. But have you ever thought about what would happen if you are not there in the future to access the money from these products? Well, that’s where a nomination Facility comes to your rescue.
We agree that it is unpleasant to think about your death or some other unforeseeable situation, but as you know life is full of uncertainties. To be ready for such a situation and to secure the future of your family and loved ones, it is important to opt for the Nomination Facility for whatever financial product you have. Without a nomination facility, your family would be deprived of the funds and may have to face a lot of difficulty in accessing funds. A nomination facility is available on different financial products such as EPF, Savings Account, FD, RD, Mutual Fund Investment, etc. In this article, we will cover everything related to a Nomination Facility and how it works on different financial products so that you can understand it more clearly.
Let’s know about the Nomination Facility in Detail first!
Before knowing about how the Nomination Facility functions for different financial products, let’s understand exactly what this facility is. To put it simply, a nomination facility allows a person who has a financial product/s to nominate someone who can access the proceeds of product/s if something unfortunate happens with the person. Nomination facility ensures that in case anything happens, the funds get transferred easily to your family or loved ones in the absence. In the absence of a nomination facility, you may submit a court order or succession certificate to claim the fund – that is a long and tiring process. The person can also nominate one or more than one person as the individual/s who will receive the money.
Nowadays, every lender provides customers the option of the Nomination Facility before they opt for any financial products. You can opt for this facility anytime during your lifetime by filling a simple form. Other than this, you can also cancel the nomination of a person at any time. There is one thing you should remember that the Nomination Facility is not mandatory. So, if you are not opting for it, it simply means you don’t want to nominate anyone. But it is advised to opt for this facility so that your funds remain accessible and useful for your dear ones.
Nomination Facility for Savings Bank Account
Savings Bank account is one of the most popular financial products among individuals. A large number of people have a Savings Bank account on their names so that they can deposit their hard-earned money safely into such accounts. Banks also provide interest on the deposited money in these accounts. So what is the use of the Nomination Facility for Savings Bank Account?
With the help of the Nomination facility, in the event of the death of the savings bank account holder, the bank can pay the amount lying in the account at that time to the nominee without the tiring documentation process. This facility is voluntary, but these days, many banks advise you to choose the Nomination facility when you are opening a savings bank account. We are showing some of the important details related to it below. Check them out.
- Nomination facility is available for accounts opened in individual capacity which includes Single or Joint Savings Bank accounts as well as the accounts of a sole proprietary concern.
- In the case of a savings bank account, a nomination can be only done in favor of a single person.
- You have the freedom to make, cancel, or change the nomination at any time during your lifetime. But you need to remember that while doing any of them, the witness is a must and the request should be signed by all the account holders.
- If you have a savings bank account and haven’t made any nominations for it yet, you can do so by filling a simple form available at branches. This form is known as form DA1. To cancel the nomination, you will need to fill the form DA2, and for changing the nominee, you will need to fill form DA2.
- A minor can also be the nominee for your Savings Bank account. But until the minor reaches the age of maturity, the natural guardian will hold all the rights related to the account.
- A nominee can receive the amount only after the death of the account holder in case of a single saving bank account and death of all account holders in case of joint accounts.
Nomination Facility of Employee Provident Fund (EPF)
You must have heard about the Provident Fund from the people around you. With this financial product, a certain percentage of your gross monthly income goes toward the Employee Provident Fund. your employer also contributes the same amount every month. You can get the total corpus at the time of retirement or in case any need arises. It is important to opt for the Nomination facility so that your family can get the amount in case something unfortunate happens.
The nomination facility can be done offline as well as online now. To nominate your family members or loved ones for your EPF account, you will need to fill a form with details like Nominee’s name, address, date of birth, etc. After filling this form, you will need to submit this Nomination Form to your employer. Your employer will share the form with the Employee Provident Fund Organization (EPFO) and your nomination will be done. To change or cancel any nomination, you will need to submit another form.
In September 2019, the EPFO announced that the nomination facility can be done online with the help of an e-nomination facility. So, with this online nomination, you can easily file an online pension claim at the needed time. Other than this, the most important thing is that an individual can easily nominate his or her family members or dear and loved ones for the EPF Account.
There are a few things that an individual will need to nominate someone for his or her EPF account. Like, an individual must have his or her Universal Account Number (UAN), allotted by the EPFO, activated at the online portal. This UAN must be linked with your Aadhaar, which should be linked with your mobile number. Other than this, you will need a Mobile Number, Date of Birth, Address, Bank Account Details, and Scanned Copies of all the photographs of Nominee/s.
To make an online nomination, you will need to visit the Official website of the EPFO. Sign in there with your UAN Number, Password and Captcha. You should go to the ‘Manage’ tab where you will see the ‘e-nomination’ to enter the new nomination. You can nominate your family members or someone else by putting the details of the person/s. To finalize the nomination, you will need Aadhaar based “e-sign” for which Aadhaar Virtual ID (VID) is mandatory. You will also need to share the PDF copy of this nomination form to your HR Department.
Nomination Facility for Fixed Deposits
Fixed Deposits (FD) is undoubtedly one of the most popular financial products among customers. As you can see from its name, with an FD, individuals deposit their hard-earned money for a period ranging from 7 days to 10 years to get attractive returns. You can choose the period for your FD according to your convenience. So, what happens in case of the death of the individual who has a fixed deposit on his or her name?
That’s where a Nomination facility helps you. With this, you can nominate an individual so that the amount will be given to the ‘nominee’ in case something unfortunate happens with you. The most important thing to remember for you is that the Nomination facility is not mandatory at all. But this would certainly save your family members from all the complex processes they would have to face in case you haven’t opted for the Nomination facility. When a nomination is in place, the bank would simply pay-off the amount lying in the individual’s account to the nominated person without any delay. We are providing some of the important details related to the Nomination facility for Fixed Deposits. Have a look.
- Nomination can be done to a single nominee whether the deposit is held single or jointly. If you want to add multiple nominees on the same account, you will need to place the request at the branch.
- An Indian resident who has a Fixed Deposit can make an NRI his or her nominee but the repatriation of the amount will be done only after the permission of the Reserve Bank of India (RBI).
- The nomination detail can be changed or canceled at any time during the operation of the Fixed Deposit account by filling a simple form.
- You can view, add, or change the nominee for your FD via Mobile Banking, Internet Banking, or by visiting the branch. If you have opted for a new nominee via Internet banking or Mobile Banking, the bank will send you the confirmation letter and a copy of the form DA1 or DA3 to your registered address.
- When you add a new nominee, the existing one will be automatically removed (if any).
Nomination Facility for Mutual Fund
Mutual Funds have emerged as one of the major investment options among the individuals who want to get good returns on their investment over time. There are so many people who invest their money in mutual funds according to their investment goals and risk appetite. So, what is the role of the Nomination facility for mutual funds?
Well, through a nomination facility, an individual holding the mutual fund units can nominate a person that can claim the mutual fund units or the redemption proceeds in the event of the death of the mutual fund unit owner. There is one thing that you need to remember that if the mutual fund units are held by more than one people, all of them would be required to make a person the nominee for these units. Simply put, the nomination is the process of appointing a person who can take care of your assets in the event of your death.
Fund Houses have made the nomination facility mandatory for all new Folios/ Accounts opened by the individuals where the mode of holding is single and not joint. We are showing some of the important things related to the Nomination facility for Mutual Funds. You can see them below.
- You can make any individual as the Nominee for your Mutual Fund units. It can be someone from your family, your friends or someone whom you can trust. Even a minor can be a nominee with guardians having the control till the maturity age.
- You can also make multiple nominees for your mutual fund and choose the shares (percentage) of each individual. You can specify if you want to give a large share to someone particular.
- The nomination process can be done while filling the ‘Mutual Fund Application Form’. You will only need to fill all the nominee details. You cannot nominate a Trust Firm, Hindu Undivided Family (HUF), etc.
- In case you don’t nominate anyone, someone from your family will need to present documents like a Will, Legal Heir Certificate, NOC from other legal heirs, etc, to get the units transferred in his or her name. So, to make the process simple, it is advised to opt for the Nomination facility.
- You can also add a nominee for your existing mutual fund units if you haven’t nominated anyone. You can also change the nominee for as many times as you want.