A nominee is the person the institution may lawfully pay. That is not the same as the person entitled to keep it. The distinction has been settled by the Supreme Court more than once, and it is still misunderstood by most families and by a good many bank branches.
Your father's fixed deposit named your brother as nominee. The bank has paid him. He says the nomination means it is his.
It does not, and this is one of the few questions in Indian succession law where the answer is clear.
What a nomination actually does
A nomination is a discharge mechanism. It tells the institution who it may safely pay, so that it is not left holding an asset while a family argues. It protects the payer.
It is not a transfer of ownership, and it is not a testamentary disposition. A will is made with the formalities of Section 63 of the Indian Succession Act. A nomination form is a line on an account opening document. The one cannot quietly do the work of the other.
So the nominee receives the money, and then holds it for whoever is entitled under the will or, where there is none, under the succession law that applies.
What the Supreme Court has held
Insurance. In Sarbati Devi v. Usha Devi (1984) the Court held that a nomination under Section 39 of the Insurance Act 1938 does not confer beneficial ownership on the nominee. The nominee takes the proceeds for the benefit of the heirs.
Bank deposits. In Ram Chander Talwar v. Devender Kumar Talwar (2010) the Court considered Section 45ZA of the Banking Regulation Act 1949 and held that the provision discharges the bank on payment to the nominee, but does not affect the rights of those entitled under succession law. The bank is protected; the nominee is not enriched.
Shares. This was the contested one. In Shakti Yezdani v. Jayanand Jayant Salgaonkar (2023) the Court held that the nomination provision in the companies legislation does not override the law of succession, and that a nominee of shares does not become the absolute owner to the exclusion of the heirs.
The pattern is consistent across all three: nomination decides who is paid, succession decides who keeps it.
Where it is genuinely different
Two areas are commonly cited as exceptions and should be checked rather than assumed.
Co-operative housing societies. Society nominations operate under co-operative legislation and the society's own bye-laws, and have historically been treated as governing who the society deals with in respect of the shares and interest in the society. That is a question of who the society recognises as a member, which is not the same as who owns the flat beneficially. The distinction is fine and litigated, and worth advice where the flat is the main asset.
Government provident funds and certain statutory funds. Some are governed by their own rules which provide expressly for payment to the nominee, and those rules have to be read on their own terms.
What this means in practice
If you are the nominee. Receiving the money does not settle anything. Spending it exposes you to a claim from the other heirs, and the fact that the institution paid you is no answer. Where the other heirs agree that you should keep it, record that in writing — a family settlement or a release — rather than relying on the nomination.
If you are an heir and someone else is the nominee. Your claim is against the nominee, not against the institution. The institution has discharged itself lawfully and will not be made to pay twice. Write to the nominee setting out the entitlement, and if that fails the remedy is a civil claim, or a partition or administration suit where the estate is larger.
If you are planning. A nomination is not an estate plan. If you want a particular person to receive and keep an asset, say so in a will. Aligning the nomination with the will avoids the argument entirely, and a mismatch between them is one of the most common causes of family litigation over modest sums.
Questions people actually ask
Does a nominee become the owner of a bank account after death?
No. Section 45ZA of the Banking Regulation Act 1949 allows the bank to pay the nominee and be discharged, but in Ram Chander Talwar v. Devender Kumar Talwar (2010) the Supreme Court held this does not affect the rights of those entitled under succession law. The nominee receives the money and holds it for the heirs.
Is a nomination the same as a will?
No. A will is executed with the formalities of Section 63 of the Indian Succession Act 1925 and disposes of property. A nomination is a form telling the institution whom it may safely pay. A nomination cannot do the work of a will, and where the two conflict the will governs entitlement.
Who gets shares after death — the nominee or the legal heirs?
The heirs. In Shakti Yezdani v. Jayanand Jayant Salgaonkar (2023) the Supreme Court held that the nomination provision in the companies legislation does not override succession law, and that a nominee of shares does not become absolute owner to the exclusion of the heirs.
What if the nominee refuses to share the money?
The claim lies against the nominee, not the institution, which has discharged itself lawfully and cannot be made to pay twice. Set out the entitlement to the nominee in writing; if that fails, the remedy is a civil recovery claim, or a partition or administration suit where the estate is larger.
Are co-operative housing society nominations different?
They may be. Society nominations operate under co-operative legislation and the society's bye-laws and have been treated as governing whom the society deals with as a member. Whether that also determines beneficial ownership of the flat is a finer question and worth advice where the flat is the principal asset.
Most succession matters are lost to the wrong document rather than the wrong argument — a year spent on a certificate that was never going to be accepted. If you are not sure which grant your situation needs, that is the question worth settling first.