Laws of nomination: Banks need to set the right practice

56

On April 3, 2016, the High Court delivered a landmark decision in establishing right of the legal heirs over the deposited or invested money against the nominees

According to Section 103 (3) of the Bank Companies Act, 1991, the nominee shall get priority over any person and all other persons shall be deprived of such property upon the death of the depositor or account-holder. Therefore, this legal provision takes precedence over any other law (e.g. law of inheritance).

The laws relating to bank accounts of a deceased in Bangladesh are mainly governed by the provisions of the Bank Companies Act 1991, which came into force on February 14, 1991.

Section 8 of the Pensioner Policy, 2004 and Section 10 of the Family Savings Policy also stated about nomination, nominee and their rights. Under the notification of Sanchayapatra Rules, 1977 (Amended on June 30, 2015), a nominee included individual and/or legal or juristic person and may be one or more. The Public Debt Act, 1944 also stipulated the rights of nominee. Thus, by above provisions the law has given absolute right of the nominee over the deposited money against the successors or heirs.

On April 3, 2016, the High Court delivered a landmark decision in establishing right of the legal heirs over the deposited or invested money against the nominees. According to the decision of the High Court the nominee would merely hold the money as trustee and thus must distribute the money among the legal heirs of the deceased. The judgment of the High Court was subsequently been stayed by the Appellate Division. Moreover, the Bangladesh Bank has issued a circular (DFIM Circular No. 2) dated June 15, 2017 restating the original position reflected in Section 103 of the Bank Companies Act 1991. 

In 2019, the High Court Division delivered the full judgment, which stated that only nominees are authorized to withdraw money from bank accounts of deceased persons and distribute it amongst the legal heirs as per the basis of the respective religious laws of inheritance. 

Though the law is clear about the issue, many banks are not following the laws reflected in the judgment. The nominees and legal heirs are thereby facing numerous problems due to the prevailing confusing practices by different banks. As such it is seen that different banks or even different branches of the same bank and surprisingly the same branch with different clients are having different practices. The proper implementation of laws and ethical practice in every bank can ensure the protection of the right of legal heirs of a deceased account-holder to its utmost. 

The author is an advocate of the Supreme Court of Bangladesh and is a partner of Legal Counsel. In addition to her diverse legal practices, she is an activist and also a regular columnist. She may be reached at [email protected]