Source: TOI
Context:
The Ministry of Finance has announced that new provisions under the Banking Laws (Amendment) Act, 2025 — relating to nomination facilities, claim settlement, and depositor protection — will come into effect from November 1, 2025. These reforms mark a major step toward improving transparency, flexibility, and uniformity in the banking system.
Legal Background
- The Banking Laws (Amendment) Act, 2025 was notified on April 15, 2025.
- It includes 19 amendments across five key legislations:
- Reserve Bank of India Act, 1934
- Banking Regulation Act, 1949
- State Bank of India Act, 1955
- Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980
- As per the notification, Sections 10, 11, 12, and 13 — dealing with nomination facilities — will come into force on November 1, 2025.
Objectives of the New Provisions
- Simplify and standardize the nomination process across all banks.
- Ensure faster claim settlement for depositors’ nominees.
- Strengthen governance and depositor protection.
- Enhance customer convenience and transparency in the banking ecosystem.
Key Features of the New Nomination Rules
1. Multiple Nominations (Up to Four)
- Depositors can now nominate up to four persons for their bank accounts, fixed deposits, lockers, and safe custody articles.
- This is the first time such flexibility is being introduced in Indian banking law.
2. Simultaneous Nomination
- Customers may nominate up to four individuals simultaneously.
- Each nominee’s entitlement share (percentage or portion) must be clearly specified, with the total equalling 100%.
- Enables transparent and proportionate fund distribution among nominees.
3. Successive Nomination
- Customers may also opt for successive nominations, where nominees are prioritized in sequence.
- If the first nominee passes away, the next nominee automatically becomes operative — ensuring continuity in claim settlement.
- For lockers and articles kept in safe custody, only successive nominations are allowed.
4. Simplified Claim Settlement
- The provisions are designed to make post-death claim settlements faster and dispute-free, protecting depositors’ families.
5. Uniform Implementation
- To ensure consistency across banks, the government will soon notify Banking Companies (Nomination) Rules, 2025.
- These rules will define standard forms and procedures for making, modifying, or cancelling nominations.
