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You probably spent considerable time choosing the right bonds for your portfolio, but have you thought about what happens to them after you are gone? Without proper bond nomination and succession planning in India, even a well-structured bond portfolio can get stuck in a legal limbo for months.
That said, your bonds are not automatically transferred to your family. It depends on whether you have a registered nominee and whether the right documents are in place. It’s easy to overlook this when life is going on as usual, but bond estate planning in India is not something you should ignore.
So, in this article, you’ll get to know everything about what to do after bond investments after death in India. Get to know everything about bond nomination, like who can be nominated, how to complete the nomination procedure, who needs succession certificates for bonds, and more.
What is Nomination in Bonds?
Nomination is the process of designating a person who can receive your bond investments after death. In India, the procedure for nomination is quite straightforward. Nominating someone is essentially a way to inform the issuer or depository that, after you, your bonds must be passed on to the nominee.
That said, a nominee does not always or automatically become the legal owner of the bonds. They essentially act as trustees who receive the bonds on behalf of the legal heirs. Ownership is ultimately determined by succession laws or your will, and not by nomination alone.
Still, nominating someone, even if they are already your legal heir, has many practical advantages. Let us find out what they are.
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Why You Should Add a Nominee to Your Bond Investments
This is why adding a nominee matters in bond estate planning in India.
Faster Transfer of Bonds
When you register a nominee, the issuer or depository can transfer the bonds directly to the bond nominee’s demat account, without waiting for any legal proceedings to conclude. This means your family gets access to investments quickly, without any delays that cause financial stress.
No Succession Certificate Needed
Without a nominee, legal heirs may need to approach a civil court and obtain a succession certificate for bonds. This process can take months and involves legal costs. A valid nomination, however, eliminates this requirement in most cases. This ultimately helps your family save time and effort.
Reduced Paperwork
If you have a nominee to take care of your bond investments after death in India, you can reduce the burden of paperwork for your family. Without a nominee, your legal heirs will have to gather and submit multiple documents like death certificates, legal heir certificates, identity proofs, and more. A nomination cuts out many of these requirements and makes the claims process easier.
No Risk of Bonds Getting Frozen
When there is no nominee, and the legal heirs have not yet established their claim, the original investor’s demat account may be frozen, and the bonds may be inaccessible for an extended period. By adding a nominee, you can ensure that there is always a designated person who can step in and claim the bonds without any legal ambiguity.
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How to Add a Nominee to Your Bonds
If you’ve missed out on adding a nominee at the time of making your bond investment, here are the various ways in which you can add one later.
Through Your Stockbroker or Online Bond Platform Provider (OBPP)
If you’re holding bonds in your demat account, you can add a nominee through the stockbroker or Online Bond Platform Provider you used to purchase them. Here’s a general overview of how to add a demat account bond nominee.
- Step 1: Log in to your trading account or OBPP platform using your credentials.
- Step 2: Navigate to the profile section of the platform.
- Step 3: Look for the nominee or account modification section.
- Step 4: Select the ‘add a nominee’ option.
- Step 5: Enter the nominee’s information, like their name, address, date of birth, percentage of allocation, and relationship with the investor.
- Step 6: Some platforms may prompt you to complete an OTP-based authentication or Aadhaar e-Sign. Complete it to submit the request.
Note: The steps outlined above may change depending on the platform you use.
Through the Depositories
Alternatively, if you only have a demat account and not a trading account or OBPP account, you can get in touch with your depository to add a demat account bond nominee. Here’s what you need to do.
- Step 1: If you have a demat account with the Central Depository Services Limited (CDSL), visit the CDSL Easi platform. On the other hand, if you have a demat account with National Securities Depository Limited (NSDL), visit the NSDL Speed-e platform.
- Step 2: Log in to the platform using your credentials. If you don’t have credentials, register yourself on the platform first before attempting to log in.
- Step 3: Complete the OTP authentication process to access your demat account.
- Step 4: Navigate to and select the nomination option from the account dashboard.
- Step 5: Enter the nominee’s details like their name, address, date of birth, percentage of allocation, and relationship.
- Step 6: Add the nominee.
Note: The steps outlined above may change depending on the platform you use.
Through the Registrar and Transfer Agent (RTA)
Every bond issue will have a registrar and transfer agent (RTA). You can also get in touch with the RTA for bond nomination and succession planning in India. Let’s take a look at the steps you need to follow to do that.
- Step 1: Visit the website of the RTA of the bond you’ve invested in.
- Step 2: If you’re using the services of the RTA for the first time, create an account for yourself.
- Step 3: Log in to the account using your credentials.
- Step 4: Navigate to the nomination section of your account dashboard.
- Step 5: Enter the details of the nominee and submit the request.
Note: The steps outlined above may change depending on the platform you use.
Now, it’s important to note that some RTAs may not offer the facility to add a bond nominee to your demat account online. If that’s the case or if you hold physical (non-demat) bonds, here’s what you must do.
- Step 1: Get a copy of the nomination form (Form SH-13) from your RTA. You may also print a copy of the form downloaded from the internet.
- Step 2: Fill the form with the details of the bonds for which you would like to register a nominee.
- Step 3: Specify the details of the nominee.
- Step 4: Sign the form and attach copies of the nominee’s identity and address proof.
- Step 5: Submit the form along with the necessary supporting documents to the RTA. Alternatively, you may also submit the form directly to the bond issuer as well.
Ensure Your Bonds Have a Nominee Registered
This concludes our guide on bond nomination and succession planning in India. If you already have a portfolio of bonds, make sure you have a nominee added to the securities. And if you are planning to invest in new bonds, complete the nomination procedure right away, so your nominee’s future is secured.
That said, if you want to invest in new government or corporate bonds, you can check out the options available on the GoldenPi platform. Earn income at a fixed rate throughout the bond’s tenure, and in case anything untoward happens, you can rest assured that your legal heirs or nominees will not have any difficulty in the investment transfer process.
FAQs on Nomination and Succession Planning for Bonds
Yes, a minor can be your nominee when you want to transfer your bond investments after death in India. However, a guardian must be appointed to manage the assets on the minor’s behalf till they turn 18.
Yes, you can update the nominee details at any time. All you need to do is submit the relevant form to your broker, DP, or the relevant registrar, along with the supporting KYC documents.
Not necessarily. If the bonds are held in demat form, your nominee will need a demat account to receive them upon transfer. However, for physical bonds, your nominee will not need a demat account.
A registered nominee can usually claim the bonds they’re nominated for without a succession certificate. It is only required when there is no nominee or no will, or if the nomination is legally disputed.
If there is no nominee and no will prepared by the bond investor, the legal heirs can approach a civil court and apply for a succession certificate. Only after it is granted can they claim the bonds.
Disclaimer:
This information is for general information purposes only. GoldenPi makes no guarantee on the accuracy of the data provided here; the information displayed is subject to change and is provided on an as-is basis. Nothing contained herein is intended to or shall be deemed to be investment advice, implied or otherwise. Investments in the securities market are subject to market risks. Read all the offer-related documents carefully before investing.
Fixed Deposit schemes are regulated by the Reserve Bank of India. GoldenPi Securities Private Limited is a registered debt broker and acts as a distributor and not as a manufacturer of the product.
