Of the 19 amendments proposed in last year’s Banking Laws (Amendment) Bill, 2024, the one that stands out for enhancing customer convenience brings in changes in nomination rules for bank accounts.
The Bill was passed by the Lok Sabha in December, 2024, and later approved by the Rajya Sabha by a voice vote in March, 2025.
The amendment in nomination rules allows up to four nominees to be appointed by an account holder, who can claim the proceeds of the deposit account after the demise of the depositor. This ensures unclaimed deposits don’t end up in Deposit Education and Awareness Fund (DEAF).
Also Read: Banking Laws Amendment Bill passed in Parliament
Here’s a breakdown of the amendment in banking law’s nomination to understand it better:
Why is nomination done?
In the event of the death of an account holder, nomination done by the depositor before his/her demise helps the bank know who to pay the amount to without insisting on a succession certificate, letter of administration, or a court order.
While nomination is optional and done on a voluntary basis by an account holder, it is almost always opted for to avoid confusion, litigation, and family disputes. In fact, the person you are nominating does not even need to be related to you – he/she may be your friend, relative, or even a neighbour.
It must be noted, however, that a nominee is only a trustee of your assets, and not considered a legal heir. This means that nominating someone does not take away the right of legal heirs on financial assets.
What were the nomination rules before the amendment?
Before the amendment, savings account and fixed deposit holders could register only one nominee. It was only in case of lockers that joint hirers could nominate up to two nominees.
So, for instance, if an account holder had registered his son as a nominee and the son predeceased him, upon the account holder’s death, the claim procedure would get delayed as the amount would now have to be paid to the legal heirs.
What changes did the amendment bring into force?
Not only does the new bill allow for up to four nominees to be appointed by an account holder, nominations are further of two types: successive and simultaneous.
Successive nomination allows for the nominees to receive funds in a predetermined order with a clear chain among the many nominees to obtain pre-defined proportions. In case of death of any nominee, the nomination in favour of that person becomes ineffective, and the fund is divided into the rest of the nominees.
For instance, if an account holder appoints his wife and two sons for his savings account, on his death, the wife will receive 100 per cent of the account balance. But, if the wife had predeceased him, then the elder son would receive the amount. However, in the event that both the wife and the elder son were not alive, the younger son would inherit the assets of the deceased.
In this nomination type, the account holder must explicitly mention the percentage proportion of deposits in favour of each nominee and appoint nominations for the whole amount.
In case of simultaneous or joint nomination, however, the account holder gets to decide the distribution of funds among the many nominees at the same time. With each nominee’s specified share being mentioned beforehand, there is greater clarity on who receives how much of the account balance.
If the percentage is not specified, then all nominees will get equal share.
For example, if an account holder nominates his wife and son, he has the option of allocating specific ratios to the tune of 50:50, 60:40, 70:30 et cetera.
The aim of the amendments
The aim of the amendments is to bring uniformity in nomination rules irrespective of what the assets are – bank deposits, demat accounts, insurance policies, or mutual funds. The government said it wanted to simplify the inheritance process for people while also reducing burdens on bank administrations, asset management and life insurance companies.
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