An Analysis of the RBI (Nomination Facility in Deposit Accounts, Safe Deposit Lockers and Articles Kept in Safe Custody with Banks) Directions, 2025

Introduction

On 28 October 2025, the Reserve Bank of India (“RBI”) issued the Reserve Bank of India (Nomination Facility in Deposit Accounts, Safe Deposit Lockers and Articles kept in Safe Custody with the Banks) Directions[1], 2025. These Directions, which come into force from 1 November 2025, apply to all banks in India including public, private, regional rural, and cooperative banks. The aim of these Directions is to bring uniformity and clarity to how banks handle nomination facilities in accounts and lockers.

Explanation

The Directions have been released pursuant to Section 35A of the Banking Regulation Act, 1949 (“Act”), and for cooperative banks, under Section 56 of the same Act. The Directions similarly establish a complete and uniform structure related to nominations in three areas: deposits accounts, safe deposit lockers, and articles deposited for safe custody with banks. The underlying objective is the simplification, transparency, and verifiability of the nomination process so that the asset can be transferred to the nominees without unnecessary delays related to a deceased customer.

Under the Directions, every bank shall provide the nomination facility at the time of opening deposit accounts, granting a safe deposit locker, or depositing a guest’s article for safe custody. Banks must also educate the customers on the value of making a nomination, especially how they can access the article on behalf of the deceased customer. Overall, the Directions clarify that “even if the customer refuses to nominate, this cannot be the basis for denying accounts or lockers.” However, the bank must obtain a written declaration from the customer if he/she refuses to nominate. In another option, the banks may indicate the refusal within their protocol.

For transparency and accountability, all banks must keep evidence of nominations and changes to nominations for all reasons. This requires banks to establish a formal and clear internal process to register, cancel and/or amend nominations. Once a bank receives a nomination form, the bank must acknowledge receipt of the nomination form within three business days. If the nomination is rejected for being incomplete or otherwise not compliant with the guidance, the bank must inform the customer in writing within three days of rejection and confirm their reasons for the rejection. This time-frame will allow for timely communication and transparency between the bank and the customer/depositor.

The Directions also require all banks to note the status of the nomination on all documentation that relates with the customer including but not limited to passbooks, account statements, and certificates for term deposits. There must be a clear notation on the documentation stating “Nomination Registered” and include the nominee’s name as applicable. This visible notation allows both the bank and customer to confirm the existence of a valid nomination at any point in time and will limit disputes at the time of claim.

One significant clarification made by the Directions is with respect to accounts held by proprietorship concerns. The RBI states that if a person holds an account in the name of a proprietorship business, it would be recognized as that person’s personal account for nomination purposes. This is especially important, as it removes the uncertainty that was previously present regarding whether or not such accounts could avail of the nomination facilities.

In similar vein, banks are also instructed to retain a Nomination register in order to register the details of all nominations, modifications and cancellations. This information must be readily available at short notice in the event of a claims arising. Further, the banks must also disseminate the details of the nomination facility in all customer education materials (for example, account opening forms, passbooks, brochures, and also on digital banking apps) to encourage a nominee option for a depositor.

The Directions also address special cases where one of many nominees dies before receiving the payment. In that instance, the nomination for the deceased nominee will be null and the bank must process the claim according to the regular procedures which are applicable to deceased accounts. This provides assurance that the settlement is done efficiently and legally.

For customers this is a big advantage. They no longer have to rely on legal processes such as succession certificate or probate for accessing the deceased’s assets. A registered nomination is enough authority for the bank to release money or contents of a locker to a nominee without delays. For banks, the nomination process helps with de-loading administrative burdens as well as potential litigation related to claim settlements.

Conclusion

The Reserve Bank of India (Nomination Facility in Deposit Accounts, Safe Deposit Lockers and Articles kept in Safe Custody with the Banks) Directions, 2025 is a pioneering effort with significant steps towards simplifying and diligently standardising nomination processes in the banking industry. By requiring the banks to offer a nomination facility, providing timelines for acknowledgments, and ensuring documentation is readily available to consumers, the RBI has cemented consumer confidence and reduced the likelihood of disputes.

[1] https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12919&Mode=0