New Delhi:Multiple nominations on individual accounts are posing operational challenges to banks in claims settlement, prompting them to seek guidance from the banking regulator.
Under existing rules, up to four persons can be nominated on a bank account or locker. Issues can arise if the nominees do not approach the bank jointly or at the same time to present their claims, said people familiar with the matter.
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“We have informally raised similar operational concerns with the Reserve Bank of India (RBI), and a formal representation is also in the works,” said a bank executive, who did not wish to be identified.
Queries emailed to the RBI did not elicit a response till press time. Another bank executive said that a formal guidance from RBI will ensure much needed uniformity since there are numerous such cases.
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“While there is clarity on the nomination with a specific share of each nominee and that the claim can be settled individually or jointly, there are operational issues that get compounded in cases where legal cases have already been filed,” the executive said, adding that broad guidelines can address such issues.
Multiple court judgements on the matter have only added to the confusion, as per executives.
Besides, courts have held the primacy of legal heirs over nomination. Earlier this year, the Orissa High Court restated the primacy of succession laws over banking nomination facilities.
In a judgement it ruled that under Section 8 of the Hindu Succession Act, a wife as a Class-I heir has the first right to her deceased husband’s estate, superseding any nomination made in favour of other family members.
Under existing rules, up to four persons can be nominated on a bank account or locker. Issues can arise if the nominees do not approach the bank jointly or at the same time to present their claims, said people familiar with the matter.
Also Read: PSBs told to draw up plan to boost rural and informal sector lending
“We have informally raised similar operational concerns with the Reserve Bank of India (RBI), and a formal representation is also in the works,” said a bank executive, who did not wish to be identified.
Queries emailed to the RBI did not elicit a response till press time. Another bank executive said that a formal guidance from RBI will ensure much needed uniformity since there are numerous such cases.
Also Read: Banks seek RBI relief on InvIT lending rules, warn 3-yr track record rule may slow infra monetisation & fresh funding
“While there is clarity on the nomination with a specific share of each nominee and that the claim can be settled individually or jointly, there are operational issues that get compounded in cases where legal cases have already been filed,” the executive said, adding that broad guidelines can address such issues.
Multiple court judgements on the matter have only added to the confusion, as per executives.
Besides, courts have held the primacy of legal heirs over nomination. Earlier this year, the Orissa High Court restated the primacy of succession laws over banking nomination facilities.
In a judgement it ruled that under Section 8 of the Hindu Succession Act, a wife as a Class-I heir has the first right to her deceased husband’s estate, superseding any nomination made in favour of other family members.
