According to reports from Mint, an NRI can be nominated for Public Provident Fund (PPF), National Savings Certificate (NSC) and Senior Citizen Savings Scheme (SCSS) accounts held by resident Indians. However, under Rule 14(9) of the Government Savings Promotion General Rules, 2018, introduced through the 2023 amendment, an NRI nominee receiving the money does not automatically get the right to repatriate the proceeds outside India. As explained by Anshuman Jagtap, Partner at Economic Laws Practice, nomination is not investment eligibility, and being named as a nominee does not give an NRI the right to open, subscribe to or continue a PPF, NSC or SCSS account if the respective scheme rules do not permit it. For mutual funds and stocks, an NRI can be appointed as a nominee subject to exchange control rules, with platforms like Zerodha requiring Indian address and mobile number for NRI nominees.
After the account holder's death, an NRI nominee would need to notify the post office or authorised bank and submit the prescribed death claim, according to Mint reports. The exact documentation may vary by scheme and institution, but may ordinarily include the death-claim form, death certificate, identity and address proof, proof of NRI status and overseas address, the relevant passbook or certificates and bank-account details. The institution may also seek tax or FEMA declarations and additional documents where the nomination is disputed or not properly reflected in its records. An NRI nominee cannot continue an SCSS account merely because they have been named as the nominee, as eligibility to continue the account must be separately satisfied under applicable rules. For mutual funds and stocks, nomination can be made at application time or subsequently through designated investor service centres, with nominees required to authenticate requests using Aadhaar-based OTP and sign the nomination form.
As reported by Mint, where the nominee is an NRI, Rule 14(9) provides that payment to the nominee is to be made on a non-repatriation basis. This means receiving the proceeds as an NRI nominee does not itself authorise direct remittance of the money outside India. According to Nishant Shanker, tax and FEMA expert at Navraj Global Advisors, if the NRI nominee is also the legal heir and rightful owner of the financial assets, they can liquidate inherited investments and seek repatriation of proceeds, subject to Foreign Exchange Management Act (FEMA) rules. Under FEMA, an NRI can generally remit up to $1 million per financial year from NRO balances or sale proceeds of assets acquired by inheritance, subject to documentation and tax compliance. Any amount above $1 million requires prior approval from the Reserve Bank of India, with proceeds typically routed through NRO accounts and AD bankers who verify inheritance documents and FEMA requirements before permitting overseas remittance.
According to Mint reports, a validly registered nominee is generally entitled to make the claim and receive the money from the post office or authorised bank, but nomination does not by itself conclusively determine the ultimate beneficial ownership of the amount. Under the Government Savings Promotion Act, 1873 and the Government Savings Promotion General Rules, 2018, a nominee may be designated as an owner of the amount or as a trustee for the benefit of the legal heirs, subject to applicable scheme rules. The final distribution of financial assets after the original investor's death is governed by the deceased's will or, in the absence of a will, applicable succession laws. Legal heirs may be able to challenge the nominee's entitlement, particularly where the nominee is designated as a trustee or where there are questions about the validity of the nomination or competing succession claims.
As reported by Mint, there is no general requirement for an NRI nominee to personally travel to India in every case. Depending on the procedures of the particular post office or authorised bank, the claim may be processed through an authorised representative or power of attorney. The process may involve documents executed overseas and notarised or apostilled, attestation by an Indian Embassy or Consulate, submission by post or courier, identity verification and an eligible Indian bank account for receiving the proceeds. A properly authenticated special power of attorney identifying the relevant investment and specific acts required for the death claim may also be used where permitted. For mutual funds and stocks, the claim process involves additional documentation and compliance requirements depending on the type of asset and applicable rules.
