The Reserve Bank of India (RBI) has issued new directions on banks’ nomination facilities for deposit accounts, fixed deposits (FDs), safe deposit lockers, and articles kept in safe custody. The new rules will come into effect from 1 November 2025, aligning with the Banking Laws (Amendment) Act, 2025.
The guidelines aim to ensure smoother claim settlements by banks after the death of an account holder while reducing procedural hardship for their legal heirs.
Nomination Facility — Optional, Not Mandatory
Under the new rules, customers are not mandated to nominate anyone while opening a bank account, FD, or locker.
Banks are, however, required to:
- Inform customers about the availability and benefits of the nomination facility.
- Explain how it simplifies the claim process in the event of the depositor’s death.
If a customer chooses not to make a nomination, banks must still allow the account or locker to be opened without any restrictions or delays.
The account holder will be asked to submit a written declaration confirming their decision to opt out of the nomination facility. If the customer declines to provide such a declaration, the bank must record the refusal in its system.
Special Cases and Handling of Claims
In cases where a nominee dies before claiming the deposit, that nomination automatically becomes ineffective, and the claim will be processed as per the rules applicable to accounts without a nominee.
Banks have also been directed to maintain robust systems for registering, modifying, or cancelling nominations as per customer requests.
Up to Four Nominees Allowed Under New Law
The Banking Laws (Amendment) Act, 2025, also effective from 1 November, allows depositors to:
- Nominate up to four individuals for the same account.
- Allocate specific shares or percentages of entitlement to each nominee.
- Appoint successive nominees, where the next nominee becomes operative only upon the death of the preceding one.
These provisions aim to reduce disputes among legal heirs and help ensure smoother distribution of assets after the depositor’s death.