Mumbai, April 6: The Reserve Bank of India (RBI) has asked banks to insist on a nomination when an individual opens a deposit account.

The central bank added that if the depositor has no nominee, the bank should obtain a letter from the depositor saying there is no nominee.

In a letter to all scheduled commercial banks on Thursday, the RBI said that though banks have been told earlier to inform depositors on the benefits of nomination facility and the survivorship clause, banks might still be opening single deposits without nomination.

Pointing to the case at Allahabad High Court, the RBI said that the court observed that the apex bank should ensure that no savings account or fixed deposit in single name is accepted, unless the name of a nominee is given by the depositors.

“It will go a long way to serve the purpose of the innocent widows and children, who are dragged on long drawn proceedings in court to claim the amount, which lawfully belongs to them,” the high court had said.

In view of these observations, the RBI said banks are advised to generally insist on a nomination for a deposit account. If the person declines, the bank should explain the advantages of this facility.

However, if the customer still does not want to nominate a person, the bank should ask for a letter saying there is no nominee. If the person still refuses to give the letter, the bank should record this on the account opening form and open the account.

“Under no circumstances, should a bank refuse to open an account solely because the customer refused to nominate,” the RBI said.

RBI had earlier told banks that the nomination facility could also be extended to deposits held in the name of a sole proprietary concern. Even in the case of such deposits, banks were told to follow the same procedure of insisting on a nomination.

Earlier, the central bank had simplified the procedure of claims in respect of deceased depositors. It had said that for payment to the survivors or nominee of the deceased depositor, banks should not insist on succession certificate, letter of administration or probate.