Section 46 of The Small Industries Development Bank of India Act, 1989
- (1)Notwithstanding anything contained in any other law, where a nomination in respect of any deposits, bonds or other securities kept with or issued by the Small Industries Bank is made in the prescribed manner, the amount due on such deposits, bonds or other securities shall, on the death of the depositor or holder thereof, vest in, and be payable to, the nominee subject to any right, title, interest or claim of any other person, in relation to such deposits, bonds or other securities.
- (2)Any payment by the Small Industries Bank in accordance with the provisions of sub-section (1) shall be a full discharge of its liability in respect of such deposits, bonds or securities.
Summary
- A person who holds deposits, bonds, or other securities with the Small Industries Bank can legally name a nominee.
- If the depositor or bondholder dies, the money automatically vests in and becomes payable to that named nominee, regardless of what other inheritance laws might say.
- However, the nominee receives the money subject to any legal right or claim that other people might have against those funds.
- Once the bank pays the money to the nominee, the bank is fully discharged of its liability and cannot be sued for that money by anyone else.
Practical examples
FAQ
1. What happens to my bank bonds if I die?
If you made a nomination in the prescribed manner, the amount due on the bonds will vest in and be payable to your nominee.
2. Can other relatives sue the bank if it pays the money to my nominee instead of them?
No, any payment by the bank to the nominee is a full discharge of its liability, meaning the bank is cleared of responsibility.
3. Does this nomination rule override my will or other property laws?
Yes, this section applies notwithstanding anything contained in any other law, so the bank will pay the nominee directly.
4. Does the nominee get to keep the money completely free of all other family claims?
The money is paid to the nominee, but they receive it subject to any right, title, interest, or claim of any other person.
Test yourself
Q1.Under Section 46 of The Small Industries Development Bank of India Act, 1989, what happens when a depositor dies after making a valid nomination?
Q2.Under Section 46 of The Small Industries Development Bank of India Act, 1989, what is the legal effect on the bank once it pays the deposit amount to the registered nominee?
Q3.Under Section 46 of The Small Industries Development Bank of India Act, 1989, how does this provision relate to other general laws regarding inheritance?
Q4.Under Section 46 of The Small Industries Development Bank of India Act, 1989, does the payment to the nominee erase the legal rights of other potential heirs to that money?