What changed
RBI issued a revised master circular that consolidates all previous instructions on nomination facility for Relief/Savings Bonds, updated as of June 30, 2010. The circular clarifies that sole or joint holders (except for promissory notes or bearer bonds) can nominate one or more persons, and for 8% Savings (Taxable) Bonds, 2003, NRIs can be nominees. It also specifies that nominations must be made before bond maturity and that agency banks must issue an acknowledgement of nomination.
What it means for you
Banks acting as agents for Relief/Savings Bonds now have a single reference document for nomination procedures, reducing confusion from multiple circulars. They must ensure proper registration of nominations, variations, and cancellations, and handle NRI nominee cases per applicable FEMA regulations. This streamlines operations but requires banks to update their internal processes and staff training to align with the consolidated rules.
What you must do
- Update internal manuals and staff training materials to reflect the consolidated nomination rules from this master circular.
- Ensure agency branches issue 'Acknowledgement of Nomination' for all valid nominations received.
- Verify that nominations for 8% Savings (Taxable) Bonds, 2003 comply with NRI remittance regulations when nominees are NRIs.
- Implement procedures to automatically cancel nominations upon bond transfer or upon holder's request for substitution/cancellation.
- Maintain a register of all nomination-related circulars referenced in the master circular for detailed clarifications.
Who it affects
Agency banks handling Relief/Savings Bonds (SBI, associate banks, nationalized banks, Axis, ICICI, IDBI, HDFC, Stock Holding Corporation), Operations staff processing bond nominations, Compliance teams at authorized banks, Investors holding Relief/Savings Bonds
Can I nominate an NRI for my 8% Savings (Taxable) Bonds, 2003?
Yes, the master circular allows sole or joint holders of 8% Savings (Taxable) Bonds, 2003 to nominate an NRI. However, remittance of interest or maturity proceeds to the NRI nominee will be governed by FEMA regulations applicable to NRIs.
What happens if a nominee is a minor?
If the nominee is a minor, the bond holder(s) can appoint a person (who is not a minor) to receive the bond proceeds on behalf of the nominee in the event of the holder's death during the nominee's minority.
When does a nomination automatically get cancelled?
A nomination is automatically cancelled if the holder applies for substitution or cancellation and it is registered by the bank, or if the bond certificate is transferred to another party.