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    Fixed Deposit Nominees

    Fixed Deposits are financial instruments that the banks provides to investors. Fixed deposits are also called as term deposits. The bank offers higher interest rate than that given on savings account. The fixed deposits have a maturity date, which the investor can choose from. The longest term that a fixed deposit can be held for is 10 years and the shortest term is 7 days. The longer the term, higher is the interest rate. The smaller banks are now providing higher rates on fixed deposits to attract more investors.

    The investor can close the fixed deposit account before the tenure ends by paying a certain penalty. The bank pays a lump sum amount on the date of maturity. Some banks also offer to pay interest in the end of the quarter. If the investor wants certain interest to be paid every month, the bank will pay the interest at a marginal discounted rate. The amount is transferred to the savings account of the investor. Up to Rs.5,000 interest paid per annum, the tax is not deducted at source.

    There are two types of scheme under fixed deposit: Cumulative, the fixed interest is payable in a quarter or on a yearly basis, but it is paid only at the end of the tenure. Under Non-cumulative scheme, the interest is paid quarterly, annually or every month. Those who require a regular income can opt for non-cumulative schemes.

    A customer can take loan against the fixed deposit. Some banks provide credit cards and loans without any requirement for the individual to have a CIBIL score. The credit card is provided against the fixed deposit maintained by him. Up to 70-90% of the value of the deposit is given as loan and credit limit on the credit card. There is a certain processing fee charged for the same. Some banks also give EMI cards, which has a set credit limit and the purchases can be repaid on an EMI basis.

    It is important to appoint a nominee for all your assets so that the assets reach the right person in the event of your death. The nominee you select must be a reliable person who can take care of the asset. So while you open a fixed deposit account, the bank asks you to mention the nominee.

    Role of the nominee:
    • He has no right over your money unless specified under the will or if he inherits the money.
    • Nominee is a mere custodian of the fixed deposit.
    • He is the contact person for the account, in case the account holder is not reachable or in an event of the account holders death.
    • The nominee directs the court on how to go about the account in the event of the account holder’s death.
    • At the time of claiming for the deposit, the nominee will have to provide identification proof.
    Procedure on appointment of the nominee:
    • Individual, single or joint account holders can appoint nominee. Hindu undivided family, trust, society etc. cannot appoint a nominee.
    • The nominee must also be an individual.
    • It is advisable to appoint a nominee as there will be less trouble in transferring the money in an event of the account holder’s death.
    • Only one person can be appointed as the nominee.
    • If you don’t appoint a nominee at the time of investment, you can appoint one on a later date. Relevant application forms are to be submitted to the bank.
    • The bank provides a column to fill out the nominee detail while taking a fixed deposit.
    Minor appointed as a nominee:

    In this case the minor’s guardian will sign on his behalf. The bank requires the nominee’s and the guardian’s name, address and photograph.

    Nomination by joint account holder:

    This is permitted by certain banks. In case of one of the joint holder’s death, the account will be transferred to the surviving account holder. If both the joint account holders are dead, then the benefits/ money are transferred to the nominee’s account.

    It is always advisable for a person opening a fixed deposit account to appoint a nominee so that the bank can easily go ahead with the instructions left with the nominee. Therefore, the account holder must carefully select the nominee, someone that he can trust. The nominee will get to decide how to go about on the loan or credit card taken on the fixed deposit.

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