Clients often ask a simple question: if I have already nominated someone in my insurance policy, bank account, demat account, mutual fund folio, PPF account or society record, do I still need a Will? The question is natural. Nomination feels like a choice. The form asks for a name. The account holder gives one. The institution records it. It is easy to believe that the asset has already been assigned for after death. That belief is common. It is also legally unsafe.
A nomination form is not a Will. It has a real function, but a limited one. It tells the bank, insurer, depository, society or government department whom to recognise after death. It reduces delay, gives the institution a valid discharge, and prevents immediate administrative paralysis. But nomination is not, in most cases, succession. The nominee may receive the asset. The person entitled to retain it is ordinarily determined by a Will, succession law, or the governing statutory scheme.
Nomination answers one question. Succession answers another. Nomination tells the institution whom it may pay, transfer to, or recognise. Transmission is the administrative act of recording that change after death. Succession decides who is legally entitled to the asset. A bank may safely pay the nominee. That does not mean the family dispute is over. A society may recognise the nominee. That does not mean title to the flat has been decided. A depository may transmit securities to the nominee. That does not necessarily defeat a Will. The nominee’s right is usually a right to receive. The heir’s or legatee’s right is a right to succeed. That is why “the nominee is the owner” is too broad. The opposite statement, “the nominee is always only a trustee”, is also too loose. A nominee is ordinarily a recipient or transmission point, subject to the rights of heirs or legatees, unless the governing statute, scheme or instrument confers a stronger right.
The statutory scheme differs by asset. The distinction between receipt and ownership must be tested against the exact statute, rule, scheme and nomination form.
For life insurance, Section 39 of the Insurance Act, 1938 governs nomination. Sarbati Devi remains the foundation. But after the 2015 amendment, the concept of “beneficial nominee” for close family members makes this area more nuanced. Policies under Section 6 of the Married Women’s Property Act, 1874 stand apart because they may create a statutory trust.
For bank accounts, fixed deposits, lockers and safe custody articles, Sections 45ZA to 45ZF of the Banking Regulation Act, 1949 apply. Their purpose is institutional clarity and discharge. They are not, by themselves, succession provisions.
For shares, demat accounts, securities and mutual funds, the Companies Act, Depositories Act, SEBI framework, depository bye-laws and AMFI/RTA processes are relevant. Nomination assists transmission. It does not automatically settle ownership.
For PPF and small savings, the Government Savings framework, the Government Savings Promotion General Rules, 2018 and the Public Provident Fund Scheme, 2019 operate as a scheme for payment and closure, not as inheritance.
For co-operative housing societies, particularly in Maharashtra, Sections 30 and 154B-13 of the Maharashtra Co-operative Societies Act, 1960 are relevant. Society recognition or provisional membership does not, by itself, decide title to the flat.
For EPF, gratuity and GPF, some schemes give the nominee a stronger right to receive. That is still not the same as saying that every nominee becomes the final beneficial owner. Behind all this remains succession law, including the Indian Succession Act, the Hindu Succession Act, and the applicable personal law.
The Supreme Court has, across asset classes, resisted the conversion of nomination into a third mode of succession.
In Sarbati Devi v. Usha Devi, the Court held that a life insurance nominee may receive the policy amount, but nomination does not itself confer beneficial ownership. In Vishin N. Khanchandani v. Vidya Lachmandas Khanchandani, dealing with National Savings Certificates, nomination facilitated payment, but did not override succession. Shipra Sengupta v. Mridul Sengupta again made the distinction clear.
For bank deposits, Ram Chander Talwar v. Devender Kumar Talwar clarified that Section 45ZA enables the bank to pay the nominee and obtain discharge. It does not make the nominee owner of the deposit to the exclusion of legal heirs.
In Indrani Wahi v. Registrar of Co-operative Societies, the Court held that a society may transfer the share or interest of the deceased member to the nominee, but such transfer does not finally decide title.
The modern anchor is Shakti Yezdani v. Jayanand Jayant Salgaonkar. The Supreme Court held that nomination under the Companies Act and depository framework does not displace testamentary or intestate succession. Nomination does not create a third mode of succession. Company law deals with transmission of securities. It does not rewrite succession law.
Union of India v. Paresh Chandra Mondal adds a useful nuance. In the GPF context, the Court held that insisting on succession documents despite a valid nomination would defeat the purpose of nomination. But it also recorded that a nominee is a trustee to collect funds and not the beneficial owner, and that competing claimants may still approach the competent court.
Nomination helps movement. It does not ordinarily decide destination.
The Banking Laws Amendment Act, 2025 has modernised nomination in banking. From November 1, 2025, nomination provisions for deposit accounts, safe custody articles and safety lockers came into effect. The updated framework permits up to four nominees. This will improve claim settlement. But it does not turn a bank nomination into a Will.
SEBI’s circular dated January 10, 2025 revised nomination facilities in the securities market. It seeks to reduce unclaimed assets, simplify transmission, and improve investor convenience. SEBI has made nomination easier and more structured. It has not converted the nominee into a statutory heir.
Insurance remains the difficult corner. Section 39, after the 2015 amendment, uses language that may give a close family nominee a stronger claim than an ordinary nominee. Smt. Kusum v. Anand Kumar indicates that even the amended “beneficial nominee” language may not automatically extinguish succession claims.
The earlier Bombay High Court view in Harsha Nitin Kokate, which appeared to give nomination in shares a stronger ownership effect, has lost force after Shakti Yezdani.
The practical answer is simple: nominate for every asset, but do not stop there. Make a Will. Keep nominations aligned with the Will. Review nominations after marriage, divorce, birth, death, family dispute, or major asset purchase. Review joint holdings and survivorship clauses separately. Do not assume society nomination gives title to a flat. Do not assume demat or mutual fund nomination defeats heirs. Treat insurance nomination after 2015 with care. Read EPF, gratuity and GPF schemes separately. Institutions are not succession courts. A bank may pay. A depository may transmit. A society may recognise. A department may release funds. If heirs, legatees and nominees contest beneficial entitlement, the dispute belongs before the competent court or forum. The safest estate plan is not nomination alone. It is nomination plus a clear Will, supported by consistent records across assets.
Nomination is useful, but often misunderstood. It prevents assets from being frozen and reduces paperwork and delay. But nomination is not ordinarily a testamentary instrument. Recent reforms have made nomination more efficient as a mechanism of access and transmission. They have not made it a substitute for succession. A nomination may move the asset. A Will, succession law, or the governing scheme decides where it finally rests.
About the author: Rishabh Gandhi is an Arbitration lawyer and former trial court Judge. Gandhi is also the founder of Rishabh Gandhi and Advocates.
Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.
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