Nomination is an Authority/Authorization given to the banker in writing to pay the credit balances in the account of the individual/sole proprietor of the sole proprietorship account, to the person specified in the Nomination form, in the case of the death of the account holder.

If the depositor does not leave a valid will when he dies, then in most of the cases, the legal heirs raise disputes in sharing the assets left by the depositor. If the depositor nominates a person, the bank is discharged from its responsibilities to the legal heirs by paying the deposit amount to the nominee. Then it becomes the responsibility of the nominee to pass on the deposit amount to the legal heirs amicably. 

Nomination can be made by the depositor/s, (singly or jointly as the case may be), in respect of his/ their deposits maintained in a bank in India. Nomination can be made in favour of only one individual. If the depositor/s wishes/wish that the deposit amount should go to a minor as the nominee (on the date of nomination) the depositor/s should also appoint another person who is not a minor, to take care of the deposit on behalf of the nominee, till the nominee attains majority.

The nomination made holds good till it is modified or cancelled by the account holder. The application forms to be used for nominating somebody or making modifications or cancellations to the nominations have all been prescribed in the Act itself.

2.7 KYC Requirements

KYC is an acronym for "Know your Customers," a term used for customer identification process. It involves making reasonable efforts to determine true identity and beneficial ownership of accounts, source of funds, the nature of customer's business, reasonableness of operations in the account in relation to the customer's business, etc which in turn helps the banks to manage their risks prudently. The objective of the KYC guidelines is to prevent banks being used, intentionally or unintentionally by criminal elements for money laundering.

KYC has two components - Identity and Address. Customer identification means identifying the customer and verifying his/her identity by using reliable, independent source documents, data or information. While identity remains the same, the address may change and hence the banks are required to periodically update their records.

Reserve Bank of India has issued guidelines to banks under Section 35A of the Banking Regulation Act, 1949 and Rule 7 of Prevention of Money-Laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Rules, 2005. Any contravention thereof or non-compliance shall attract penalties under Banking Regulation Act.

Money Laundering: Money laundering is the process whereby the proceeds of crimes (like drug trafficking, child pornography etc.) are transformed into legitimate money or other assets.

Money obtained from certain crimes, such as extortion, insider trading, prostitution, drug trafficking, illegal gambling or tax evasion is "dirty". It needs to be cleaned to appear to have derived from non-