Multiple Nomination in Bank Account Allowed from 1 Nov
·
Provisions aim
to give depositors the flexibility to make nominations as per their preference,
allow Multiple Nominations (up to 4), ensuring uniformity, transparency, and efficiency
in claim settlement
·
Banking Laws (Amendment)
Act, 2025 envisions to strengthen governance standards, enhance depositor and investor
protection, improve audit quality in PSBs, promote customer convenience, among others
Overview: The Banking
Laws (Amendment) Act, 2025, notified on 15 April 2025, introduces
reforms to strengthen governance, enhance depositor protection, and improve
customer convenience.
The provisions relating to nomination
(Sections 10–13) will come into effect from 1 November 2025, as
per the latest Central Government notification.
Scope of
Provisions
Applicable
to:
·
Deposit accounts
·
Articles kept in safe custody
·
Contents of safety lockers
maintained with banks
Key
Features
1.
Multiple Nominations (up to four):
o
Customers can nominate up to four persons,
offering flexibility and easing claim settlement.
2.
Types of Nomination:
o
Simultaneous Nomination:
§ Up to
four nominees can be named at once, with each assigned a specific
percentage share (totaling 100%).
§ Ensures transparent
and proportionate distribution among nominees.
o
Successive Nomination:
§ Nominees
act in sequence — the next becomes operative only upon the death of the
preceding one.
§ Ensures continuity
and clarity in succession.
3.
Applicable Facilities:
o
Deposits: Simultaneous or successive
nominations allowed.
o
Articles in Safe Custody / Safety Lockers: Only
successive nominations permitted.
4.
Procedural Framework:
o
Banking Companies (Nomination) Rules, 2025 will
prescribe the procedure and forms for making, cancelling, or updating multiple
nominations.
Implementation
Timeline
·
Sections 10–13 (Nomination-related provisions):
Effective 1 November 2025.
·
Sections 3, 4, 5, 15–20: Already
effective from 1 August 2025 (as per Gazette Notification S.O. 3494(E),
dated 29 July 2025).
Broader
Objectives of the Amendment Act
·
Strengthen governance and audit quality in
public sector banks.
·
Enhance depositor and investor protection.
·
Promote customer convenience through
flexible nomination facilities.
·
Improve uniformity and transparency in bank
reporting to the RBI.
·
Rationalise tenure of directors in
cooperative banks.
The Key Provisions
relating to Nomination under the Banking Laws (Amendment) Act, 2025 will come into
effect from 1st November 2025. The Banking Laws (Amendment) Act, 2025 was
notified on 15th April 2025 (Gazette Notification link attached below). It contains
a total of 19 amendments across five legislations—the Reserve Bank of India Act,
1934, Banking Regulation Act, 1949, State Bank of India Act, 1955
and Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and
1980.
The notification
said that the provisions of the Banking Laws (Amendment) Act, 2025 “shall
come into force on such date as the Central Government may, by notification in the
Official Gazette, appoint” and different dates may be appointed for different provisions
of the Act.
Accordingly, the
Central Government has notified that the provisions contained in Sections 10,
11, 12 and 13 of the Banking Laws (Amendment) Act, 2025 shall come into
force with effect from 1st November 2025. The Gazette Notification
to this effect is available at the link below.
The provisions
now being brought into effect from 1st November 2025 through Sections 10, 11, 12
and 13 relate to nomination facilities in respect of deposit accounts, articles
kept in safe custody, and the contents of safety lockers maintained with banks.
The key features
of these provisions are as follows:
i.
Multiple Nominations: Customers may
nominate up to four persons, either simultaneously or successively, thereby simplifying
claim settlement for depositors and their nominees.
ii.
Nomination for Deposit Accounts: Depositors may
opt for either simultaneous or successive nominations, as per their preference.
iii.
Nomination for Articles in Safe Custody and Safety Lockers: For such facilities,
only successive nominations are permitted.
iv.
Simultaneous Nomination: Depositors may
nominate up to four persons and specify the share or percentage of entitlement for
each nominee, ensuring that the total equals 100 percent and enabling transparent
distribution amongst all nominees.
v.
Successive Nomination: Individuals maintaining
deposits, articles in safe custody, or lockers may specify up to four nominees,
where the next nominee becomes operative only upon the death of the nominee placed
higher, ensuring continuity in settlement and clarity of succession.
The implementation
of these provisions will give depositors the flexibility to make nominations as
per their preference, while ensuring uniformity, transparency, and efficiency in
claim settlement across the banking system.
The Banking Companies
(Nomination) Rules, 2025, detailing the procedure and prescribed forms for making,
cancelling, or specifying multiple nominations, will be published in due course
to operationalise these provisions uniformly across all banks.
The Central Government
had earlier appointed 1st August 2025 as the date on which certain provisions
of the said Amendment Act, namely Sections 3, 4, 5, 15, 16, 17, 18, 19 and 20,
came into force vide Gazette Notification S.O. 3494(E) dated 29th July 2025. The
Gazette Notification to this effect is available at the link below.
The Banking Laws
(Amendment) Act, 2025 aims, inter-alia, to strengthen governance standards
in the banking sector, ensure uniformity in reporting by banks to the Reserve Bank
of India, enhance depositor and investor protection, improve audit quality in public
sector banks, and promote customer convenience through improved nomination facilities.
The Act also provides for rationalisation of the tenure of directors, other than
the Chairman and whole-time directors, in co-operative banks.