What changed
RBI issued a revised Master Circular on 'Nomination facility in Relief / Savings Bonds', consolidating all prior instructions into one document updated annually. The circular includes provisions for nominating NRIs for 6.5% Savings Bonds 2003 (Non-Taxable) and 8% Savings (Taxable) Bonds 2003. It also clarifies that nominations automatically cancel upon transfer of the bond or upon holder's request for substitution/cancellation.
What it means for you
Banks acting as agency banks for Relief/Savings Bonds must ensure their staff are trained on the consolidated nomination rules, including the ability to nominate NRIs for specific bond types. The requirement to issue an 'Acknowledgement of Nomination' adds an operational step that banks must integrate into their processes. This circular reduces ambiguity by providing a single reference point for all nomination-related procedures.
What you must do
- Update internal manuals and staff training materials to reflect the consolidated nomination rules from this master circular.
- Ensure that agency bank branches issue an 'Acknowledgement of Nomination' for every nomination made by bondholders.
- Verify that systems can handle nominations for NRIs on 6.5% Savings Bonds 2003 and 8% Savings (Taxable) Bonds 2003, with proper remittance checks.
- Communicate to relevant departments that nominations automatically cancel upon bond transfer or upon holder's request for substitution/cancellation.
Who it affects
Agency banks handling Relief/Savings Bonds (SBI, associate banks, nationalized banks, ICICI, IDBI, HDFC, Axis), Public Debt Offices (PDOs), Stock Holding Corporation of India Ltd, Bondholders (individual and joint holders)
Can a non-resident Indian (NRI) be nominated for any Relief/Savings Bond?
No, NRI nomination is only permitted for 6.5% Savings Bonds, 2003 (Non-Taxable) and 8% Savings (Taxable) Bonds, 2003. Remittance of interest/maturity value to NRIs will follow applicable regulations.
What happens if a nominee is a minor?
The bondholder can appoint a person (who is not a minor) to receive the bond proceeds on behalf of the minor nominee in the event of the holder's death during the nominee's minority.
Does a nomination automatically cancel if the bond is transferred?
Yes, any nomination stands automatically cancelled if the holder transfers the bond to another person.