A new rule has been introduced in the Banking Laws (Amendment) Bill, passed by the Rajya Sabha on March 26. This states that the Bank Account holders will soon be allowed to appoint up to four nominees. Lok Sabha had passed The Banking Laws (Amendment) Bill in December 2024.
Finance Minister Nirmala Sitharaman has said that the account holders will soon have the flexibility to choose between two types of nominations which is “successive” and “simultaneous” nominations. However, you should note that these nominations will not be applicable for renting bank lockers. For lockers, only successive nominations will be permitted, ensuring a clear line of succession for accessing the locker, preventing potential disputes.
New Nomination Rules
The new rule allowing multiple nominees for bank accounts has been a long-awaited relief for many customers. It gives depositors more flexibility, enhances security, and ensures a smoother process for transferring assets to their loved ones. According to the experts, After an account holder passes away, the nominee serves as a custodian, ensuring a smooth transfer of funds. However, the nominee does not automatically become the rightful owner of the money. Instead, they are merely authorized to receive and manage the funds on behalf of the legal heirs or beneficiaries.
Unclaimed deposits as per Reserve Bank of India’s (RBI)
According to the Reserve Bank of India (RBI) annual report, As of March 2024, unclaimed deposits with banks in India totaled Rs 78,213 crore, a 26% increase year-on-year. This was Rs 62,225 crore in March 2023. These funds are transferred to the Depositor Education and Awareness (DEA) Fund. This wide difference of unclaimed deposits with banks might have triggered for the rule permitting 4 nominees with the bank account.
By allowing multiple nominees, account holders can have peace of mind knowing their money will be shared as they intended. This also helps prevent funds from being left unclaimed, ensuring their loved ones receive what’s rightfully theirs.
The amendment introduces two methods of multiple nominations- successive and simultaneous nomination. Depositors will have the option of successive or simultaneous nomination facility, while locker holders can have only successive nominations.
Simultaneous Nomination And Successive Nomination
Simultaneous Nomination- Where nominees are assigned specific percentage shares, or successive nomination, where nominees inherit in a predefined order. This change is expected to make fund access smoother for families while also reducing procedural delays.
Simultaneous nomination- Where account holders can name multiple people to receive their funds after their passing, ensuring a fair and smooth distribution of their money.
