The Indian banking sector has been on the cusp of transformation, with several new changes being introduced successively to upscale the Indian banking domain, and automate the operational processes to as high degree as possible.
In this regard, one major amendment introduced in the existing banking realm is the increment in the number of nominees for each account, with the Banking Laws (Amendment) Act, 2025 promising more options for depositors with new nomination rules. The Amendment Act 2025, introduces significant changes to India’s banking regulations, impacting reporting timelines, customer nominations, and governance standards.
Who is a Bank Nominee?
A bank nominee is a person appointed by the account holder to receive the funds of that account in the event of the actual holder’s death. This nomination is intended to streamline asset transfers and prevent delays for the nominee and legal heirs.
As per the new guideline, the banks will now allow account holders to nominate up to four individuals for their accounts, replacing the previous single-nominee system. This amendment came into effect after being notified by the government and aims to simplify the process of savings fund distribution after the account holder’s death.
There are two major nomination options holders can choose from, to specify how the funds should be distributed among their nominees:
- Successive Nomination
- Simultaneous Nomination
Who Can Be a Nominee?
Ideally, individuals close to the account holder – spouse, children, parents, siblings, friends, or other trusted persons can serve as nominees. Even minors can be nominated but a guardian manages the funds until the child becomes an adult.
Key Features & Amendments:
1) Increased Nominees:
Instead of just one nominee as per the existing norm, individuals can now nominate up to four people for their bank accounts, fixed deposits, and even safe deposit lockers.
2) Simultaneous Nomination:
This technique allows account holders to specify the percentage of the account balance each nominee should receive (maximum up to four nominees).
3) Successive Nomination:
This option enables the account holder to establish an order in which the nominees will inherit the funds, meaning if the first nominee passes away or is unable to claim, the next nominee in line will receive the funds.
4) Simplified Process:
The amendment is designed to streamline the process of fund transfer after the account holder’s death, potentially reducing delays and disputes.
5) Uniformity:
The changes aim to bring uniformity and consistency to the nomination rules across various financial products like bank deposits, mutual funds, and insurance policies.
6) Implementation:
While the amendment is in place, banks may have specific procedures for implementing these changes, so it’s recommended to consult with your bank for further details.
- The multiple nominee system will bring greater flexibility in dividing proceeds among children, spouse, or other heirs. It will also lead to avoidance of conflicts due to exclusion and better planning with respect to the account holder’s financial goals.
- The RBI has proposed that nomination forms include the nominee’s email address and phone number, as per its May 2025 circular. This makes correspondence and asset transfer after death smoother and more efficient.
- With a valid nominee, the beneficiary can claim funds using minimal paperwork—mainly a death certificate and KYC, without excessive affidavits or succession certificates.
How to Nominate or Update Nominee(s)?
Online: Through Net banking or Mobile banking
Offline: Visit the bank branch, fill out a nomination form—with signatures (and guardian signature for minors)
Multiple Nominee Case:
Indicate percentage shares for each nominee. But if the share is unspecified, the funds are split equally amongst all of the nominated personnel. All nominees must submit full details—name, relationship, date of birth (for minors), address, PAN/Aadhaar/Passport/Driving License, phone, and email.
Benefits of the Amendment
- Reduced Complexity- More nominees and detailed contact information means fewer delays for families and banks.
- Better Transparency – Nominee distribution aligns with the holder’s intent, reducing likelihood of disputes.
- Quicker Settlements – Minimal documentation speeds up fund transfer and reduces administrative backlogs.
- Financial Security – Nominee arrangements ensure coverage across multiple heirs – especially valuable in non-joint account situations.
The revamped nomination rules – ranging from multiple nominees to more exhaustive nominee data have been implemented to transform how assets are handled post-demise of the primary account holder. These changes reduce legal hassles, accelerate settlements and offer clarity to families during difficult times.
Pro Tip: Review your fund and bank accounts today and update your nomination arrangements, to avoid any kind of future dispute amongst your loved ones.