Rules for more than 1 nominee in deposit accounts, lockers notified

IN NEWS

Rules for more than one nominee in bank deposits, lockers notified

(Source: The Hindu BusinessLine, October 28, 2025)The Finance Ministry has notified new rules allowing up to four nominees for bank deposit accounts and lockers. These provisions, effective from November 1, 2025, aim to reduce the growing number of unclaimed deposits in the banking system.

KEY HIGHLIGHTS

• Maximum Nominees:
  Up to four individuals can now be nominated for bank deposit accounts, safe custody articles, and safety lockers.
• Effective Date:
  November 1, 2025, when Sections 10–13 of the Banking Laws (Amendment) Bill come into effect.
• Consent Requirement:
  Any change or cancellation of a nomination will now require written consent from all depositors, in the case of joint accounts.
• Minor Nominee Provision:
  If the nominee is a minor, depositors can appoint another adult individual to receive the deposit amount on the minor’s behalf in case of the depositor’s death.
• Deposits in Minor’s Name:
  Nomination must be made by an individual lawfully entitled to act on behalf of the minor.
• Nomination Limit:
  If more than four names are listed by mistake, only the first four in order will be legally recognised.
• Mode of Nomination:
  Nomination can be made through physical or electronic mode.

RATIONALE BEHIND THE MOVE

• The move aims to reduce unclaimed deposits in banks, which often arise when depositors die without a clear nominee or when the nominee is untraceable.
• It provides greater flexibility and legal clarity for families and legal heirs in settlement of claims.
• Enhances transparency and digitisation in banking nomination procedures.

DATA INSIGHT

• As of June 30, 2025, total unclaimed deposits:
  • Public Sector Banks: ₹58,330.26 crore
  • Private Sector Banks: ₹8,673.72 crore
• Unclaimed deposits arise from:
  • Inoperative savings/current accounts (inactive for 10 years)
  • Term deposits not claimed within 10 years of maturity

These funds are transferred to the Depositor Education and Awareness (DEA) Fund maintained by the Reserve Bank of India (RBI). Depositors can still claim them later with applicable interest.

STATIC BACKGROUND

• Depositor Education and Awareness (DEA) Fund:
  • Established by RBI under Section 26A of the Banking Regulation Act, 1949.
  • Purpose: To promote awareness among depositors and enable claim settlement of unclaimed deposits.
• Banking Laws (Amendment) Bill:
  • Amends provisions related to nomination, locker safety, and deposit claim settlements.
  • Seeks to modernise banking procedures through digital compliance and multi-nominee flexibility.

SIGNIFICANCE

• Promotes financial inclusion and protects depositors’ interests.
• Reduces legal disputes among heirs and successors.
• Ensures faster claim settlement and better traceability of nominee details.
• Strengthens banking governance and compliance framework.
  
  Updated - October 28, 2025 at 09:48 AM | Business Line