Beginning November 1, 2025, bank customers will have the opportunity to nominate up to four nominees for their accounts, either simultaneously or successively, as per new rules instituted under the Banking Laws (Amendment) Act, 2025. This amendment represents a significant enhancement in the nomination process aimed at promoting transparency, efficiency, and uniformity in claim settlements for bank depositors and nominees across India.
The Banking Laws (Amendment) Act, 2025, which was notified on April 15, 2025, brought 19 amendments across five important banking legislations including the Reserve Bank of India Act (1934), Banking Regulation Act (1949), and Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980. The nomination provisions under this act are designed to strengthen governance standards, improve depositor protection, and enhance audit and operational quality in banks.
What are the New Nominee Rules?
Under the new provisions effective from November 1, 2025:
- Depositors can nominate up to four persons for their bank accounts.
- Nominations can be made either simultaneously or successively, depending on the depositor’s preference.
- For simultaneous nominations, depositors must specify the share or percentage of entitlement for each nominee, with the sum totaling 100%, ensuring clear and transparent distribution.
- For successive nominations, nominees are selected in order of priority. The subsequent nominee’s entitlement becomes effective only upon the death of the earlier nominee, thus maintaining a clear succession line.
- These options apply not only to deposit accounts but also to articles held in safe custody and the contents of bank safety lockers. However, for articles in safe custody and safety deposit lockers, only successive nominations are permitted.
What are the Benefits of the New Nominee Framework?
This new nomination framework has multiple benefits:
- It simplifies the claim settlement process after the depositor’s demise by clarifying the rightful claimants and their shares or order of entitlement.
- It minimizes disputes among legal heirs and nominees by providing a clear legal structure for nomination and claims.
- It offers flexibility to depositors to nominate multiple beneficiaries according to their wishes.
- Enhances transparency and uniformity in nomination practices across the banking industry.
- Provides better protection and governance around depositor assets held in banks.
The government will issue the Banking Companies (Nomination) Rules, 2025, outlining the procedures for making, amending, or canceling multiple nominations in banks. This will ensure that banks uniformly implement these changes and provide streamlined documentation and processes to customers.
Depositors are advised to review their nomination designations post-November 1, 2025, and make adjustments if necessary. For those opting for simultaneous nominations, clear allocation of shares will be important to avoid ambiguity. Those choosing successive nominations should rank nominees according to priority carefully.