NRI Account Nomination Rules
As an NRI managing money in India, you’ve likely opened NRE, NRO, or FCNR accounts. But have you nominated someone to receive those funds if something unexpected happens? Many NRIs overlook this step, leaving their family to face long legal delays.
In this guide, we’ll explain nomination rules in simple terms—what they mean, how to do it, and why it’s crucial for peace of mind.
What Is a Nomination in Bank and Investment Accounts?
Nomination allows you to legally appoint a person who will receive the account funds in the event of your death. It’s not the same as legal heirship—it only gives the nominee the right to receive the money, not necessarily to own it fully if there are legal disputes.
Still, it makes fund transfer quicker and avoids your family dealing with unnecessary paperwork.
Why Nomination Matters for NRIs
If you live abroad, it’s difficult for your family in India to access your money without clear nominations. Indian banks and financial institutions require either a nominee or legal succession documents before releasing funds.
Example: An NRI in the US had no nominee on his NRE FD. After he passed away, his wife had to get a succession certificate from an Indian court—costly and time-consuming.
With a nominee in place, banks can release the funds directly without court intervention.
Where Can NRIs Appoint Nominees?
You can appoint nominees for:
- NRE/NRO/FCNR bank accounts
- Mutual funds and demat accounts
- Fixed deposits
- Insurance policies
- PPF and NPS (if previously opened as resident and continued)
Nomination is allowed in most Indian financial instruments and is governed by RBI and SEBI rules.
Who Can Be a Nominee?
- Any individual (resident Indian or NRI)
- Minor children (with a guardian)
- Spouse, parents, siblings, or even friends
There is no restriction on who you nominate, but it should be someone you trust.
Tip: Nominee and legal heir don’t have to be the same. But it’s wise to align them or include clear instructions in your Will to avoid conflicts.
How to Add a Nominee to Your NRI Accounts
For Bank Accounts
- Fill out the Nomination Form DA1 provided by your bank
- Submit valid ID proof of the nominee
- If you’re abroad, you can submit scanned forms by email (depends on bank) or courier signed originals
- Some banks allow online nomination through internet banking
For Mutual Funds or Demat Accounts
- Use form provided by your fund house or depository participant
- Add up to 3 nominees and assign percentage shares
- Provide PAN and proof of identity for each nominee
Tip: Always keep the nomination updated after life events like marriage, children, or relocation.
Modes of Holding and Nomination
- For joint accounts, all holders must agree on the nominee
- In “Either or Survivor” mode, the survivor has full access even before the nominee steps in
- In single-holder accounts, nomination is strongly recommended to avoid probate delays
Example: An NRI in Dubai had a single-holder NRO account and no nominee. His son had to wait almost a year to access the money due to legal documentation issues.
Can You Change or Cancel a Nominee?
Yes. You can update, change, or cancel your nominee at any time by submitting a fresh nomination form to your bank or investment provider. The latest nomination always overrides previous ones.
Real-Life Tip: Always Add a Nominee and a Will
While a nominee helps with quick access to funds, a registered Will ensures legal ownership and clarity. If there is no Will, the nominee may receive the funds but could face legal challenges from heirs.
Tip: NRIs should consult a cross-border estate planning expert to align nominations and inheritance across India and their country of residence.
Common Mistakes NRIs Should Avoid
- Not nominating anyone assuming it’s not urgent
- Forgetting to update nominee after marriage or divorce
- Assuming nominee automatically becomes legal heir
- Having conflicting nominations across assets without a clear Will
Final Thoughts
Nomination is a simple but powerful tool to protect your loved ones and ensure your Indian finances are smoothly transferred in case of an emergency. It saves time, reduces stress, and avoids legal hassles for your family.
If you haven’t added or reviewed your nominees lately, now is the time to do it. One small step today can make a big difference tomorrow.