After the petitioner’s
mother passed away in 2020, the petitioner, the nominee in all her Fixed
Deposit Receipts (FDRs) in the Bank of Baroda, asked the bank to release the
funds. The bank refused, citing succession issues, even though Section 45ZA of
the Banking Regulation Act gives nominees the right to receive such funds after
the depositor’s death.
The Reserve Bank of
India’s Circular No.: RBI 2004-05/490 of June 9, 2005, further directs banks to
release funds to nominees without insisting on documents like succession
certificates, provided all formalities are completed.
Importantly, the Supreme
Court, in Ram Chander Talwar v. Devender Kumar Talwar (2010), clarified that being a nominee doesn’t make you
the owner of the money. The funds belong to the deceased’s estate and must be
distributed according to inheritance laws.
The Allahabad High Court
agreed, allowing the petitioner to receive the funds but directed him to file
an affidavit before the Bank of Baroda that the money being received by him is
being held by him in trust and undertakes to make payment of the same to the
legal heirs as and when decided.
In a nutshell, the law
supports a nominee's right to access funds quickly. However, the nominee as a
trustee of funds must respect and fulfill the legal heirs' claims as decided by
the courts.
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