The Banking Laws (Amendment) Act, 2024 allows up to four nominees and introduces successive or simultaneous nominations, but a nominee’s death can leave part of a deposit subject to the legal-heir claims process.
India’s banking rules on nominations for deposits have been broadened under the Banking Laws (Amendment) Act, 2024, giving savers more flexibility over who receives money after death. According to the Banking Tutor’s summary of the changes, depositors can now name up to four nominees, rather than just one, and can choose either successive or simultaneous nomination for deposits. The Reserve Bank of India has long said that the nomination facility is intended to simplify claims and reduce disputes between banks and legal heirs.
Under simultaneous nomination, the depositor can allocate fixed shares to multiple nominees, or leave the split unspecified, in which case the money is divided equally. The Banking Tutor notes that the nomination applies to the full deposit amount, not to separate portions. If one nominee dies before the depositor’s money is paid out, that nominee’s share lapses only in relation to that nominee, while the remaining nominated shares continue to stand.
The handling of that lapsed share is a key point for depositors and families. In the examples set out by the Banking Tutor, if one of three simultaneous nominees dies before the depositor and the nomination is not updated, the deceased nominee’s portion is treated as if no nomination had been made for that slice of the deposit. In practice, that money would generally be settled through the bank’s claim process for deposits without a valid nominee for that part, and it would fall to the depositor’s legal heirs rather than the deceased nominee’s heirs.
Successive nomination works differently. Here, the first named nominee has priority, and lower-ranked nominees receive the proceeds only if those ahead of them have died. Where the order is not expressly stated, the Banking Tutor says the names are deemed to follow the order in which they appear on the form. The examples also show why the revised rules matter in cases where a nominee cannot be traced or dies after the depositor: the bank may pay the undisputed shares first and hold back the rest until the missing nominee appears or the relevant legal documentation is produced. The RBI has repeatedly advised depositors to keep nominations current, precisely to avoid such complications.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
