Under Indian banking and life insurance rules, can one person make another who’s not their relative by blood, marriage or adoption a nominee for their bank account and insurance policy? I’m a queer woman in a relationship with another woman and want to make some plans for our future.
For many cisgender heterosexual persons, rights and entitlements are as easy as breathing. They don’t need to put in extra effort to achieve them. They’re just there for them to claim. For most of them, it wouldn’t cross their minds to think whether it’s the same for people who’re not cisgender heterosexual. Well, it isn’t.
We haven’t yet reached a level of understanding and sensitivity where we can calmly accept diversity and not bat an eyelid. We’re at a nascent stage of civilization where we’re still fighting over territory, religion, and even of choice of food and clothing. Change in social perspectives has always been a slow process. Unfortunately, in the process of waiting, many lives are lost, many dreams shattered.
Fortunately, there are certain avenues where we need to and can push for the rights of queer people, who are equal citizens of this country. In 2014, the Honourable Supreme Court of India acknowledged the equal rights of transgender persons, and in 2018, it went ahead to decriminalize non-penile vaginal sexual intercourse among consenting adults.
It’s true that the issue of right to marriage for queer people is still being debated before the courts of law, and the dialogue around adoption and inheritance rights of queer individuals is at an early stage. But this needn’t deter us from fighting for certain rights where marriage or inheritance has no role to play.
I had the opportunity to advice a queer couple Suchandra Das and Sree Mukherjee who live in Kolkata and had similar queries as the ones posed above. On legal advice, they decided to file two applications under the Right to Information Act, 2005 (RTI). One was addressed to the Life insurance Corporation of India (LIC) and the other to the Reserve Bank of India (RBI).
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In the first RTI application, the relevant queries were whether one can change the name of the nominee in an existing life insurance policy availed from the LIC, and whether the nominee might be someone who isn’t related to the policyholder by birth, consanguinity, marriage or adoption.
In reply to the first query, the LIC answered in the affirmative. To the second query, the LIC informed: “There is no illegality in nominating any person, including a stranger or a legal entity”. In effect, the LIC admitted that they don’t have any rule that bars a policyholder from making a person not related to them by birth, consanguinity, marriage or adoption as their nominee. This unambiguously opens the door for queer individuals to put the name of their partners or friends as nominees in their insurance policies.
There’s a rider though to be kept in mind. There’s a legal difference between a nominee and a successor. A nominee is someone who’s authorized by the policyholder to whom the insurance company will hand over the insurance funds in the absence of the policyholder. However, the nominee can only be the recipient of the money and is duty bound under law to hand over the entire money to the successor of the deceased. A nominee, therefore, is merely an agent of the policyholder.
If a policyholder wants their nominee to be the recipient as well as the holder of the money, then they have to execute a registered will in favour of the nominee. This has been stated by the Supreme Court in Civil Appeal No.1684 of 2004 in the matter of Ram Chander Talwar & Another Vs. Devender Kumar Talwar & Others.
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The second RTI application was addressed to the RBI with a similar query, that is, whether a bank account holder can make someone a nominee who’s not related to them by birth, consanguinity, marriage or adoption. The RBI tactfully avoided answering the query directly, but they pointed towards the relevant provisions that are silent about any restrictions on who can be a nominee.
Sections 45ZA to 45ZF of the Banking Regulation Act, 1949 deal with the issue of nomination. There’s no mention of any condition nor are there any restrictions regarding who can be a nominee.
An in-depth look into the Banking Companies (Nomination) Rules, 1985 will further clarify that having a relationship with the nominee is not mandatory. Form DA1 with the heading ‘Nomination under Section 45ZA of the Banking Regulation Act, 1949, and Rule 2(1) of the Banking Companies (Nomination) Rules, 1985 in Respect of Bank Deposits’ clearly states in the 6th column “Relationship with depositor, if any”. This leaves no doubt that having a specific relationship, much less, one relating to birth, consanguinity, marriage or adoption is not mandatory for making someone a nominee.
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It’s clear, therefore, that any insurance company or bank, private or public, cannot insist that you can make only someone related to you as a nominee. If they demand so, you can challenge them citing the RTI replies and banking rules mentioned above. If they persist, send them an official letter demanding from them to cite the relevant provisions which support their claim of making only a family member as the nominee. In the case of banks, you’ll also be well within your rights to approach the Banking Ombudsman appointed by the RBI if they still don’t relent.
These banking and insurance rules and regulations can be handy tools for queer people to fight for at least some of their rights. Please write to Varta Trust at email@example.com if you have further queries or need advice in this regard.
About the main illustration: Copy of the reply received from the LIC against the RTI application filed by Suchandra Das and Sree Mukherjee who have generously shared the copy with Varta