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With the introduction of the Banking Companies (Nomination) Rules, 20251(Rules), the government aims to create a robust mechanism to streamline the process for nominating beneficiaries for bank deposits, articles in safe custody, and safety lockers held by banking companies across India. The rules significantly modernize the existing system through the incorporation of digital authentication, thereby ensuring both, greater transparency and improved depositor control over the nomination process.
Pursuant to the 2025 Amendment in the Banking Regulation Act, 1939 and the Rules, a depositor is allowed to nominate up to four persons to whom, in the event of death of the person to be returned by the banking company.2 The implementation of the Rules would significantly help in matters of succession by simplifying the process of claiming a deceased person's bank deposits and locker contents, reducing family disputes, and minimizing unclaimed assets. A depositor can nominate several individuals, either successively or simultaneously. 3 The only requirement is that the depositor must clearly define the exact percentage each nominee will receive, ensuring the total distribution adds up to 100%. The process of nomination has been digitized with the introduction of e-nomination which shall be authenticated either by e-sign, or via the internet/mobile banking applications.4
Nominations can be made only for accounts held in individual capacity, not in any representative or official capacity. If the nominee is a minor, the depositor must appoint a guardian to receive the funds. For accounts or lockers held in a minor's name, the authorized individual acting on the minor's behalf must execute the nomination. Banks are obliged to issue written or digital acknowledgments for nomination, cancellation, or variation thereof, and register such actions in their records.
Often, lack of clarity in succession planning and nomination processes leads to prolonged family disputes and legal uncertainty, creating a blot on the legacy of the deceased. The article, Inheritance Without Clarity: The Legal Pitfalls by our partner Nitin Jain which featured in Times Entertainment effectively deciphers how absence of a clear will or proper documentation creates hindrances in effectuating the will of the deceased especially in complex family hierarchies. With the introduction of the e-nomination process, succession planning would not only make the mechanism robust but also pave a way through which it can be channelled effectively even in complex and family hierarchies.
Footnotes
1. https://egazette.gov.in/(S(0rrsqcz3xjkxzyp4lppexr3n))/ViewPDF.aspx
2. Section 45-ZA, 45-ZC and 45-ZE of The Banking Regulation Act, 1949 r/w Rule 2(3) of the Banking Companies (Nomination) Rules, 2025.
3. Rule 2(1) of the Banking Companies (Nomination) Rules, 2025.
4. Rule 2(4) of the Banking Companies (Nomination) Rules, 2025.
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