RBI New Direction on Bank’s Nomination Facility

Introduction:

The RBI has issued Reserve Bank of India (Nomination Facility in Deposit Accounts, Safe Deposit Lockers and Articles kept in Safe Custody with the Banks) Directions, 2025[1] on October 28, 2025 to facilitate smooth and swift settlement of claims by banks on the account of death of a deceased customer and to limit distress faced by family members of deceased customers. These Directions came into force with effect from November 1, 2025.

Notably, earlier this year, the Banking Laws (Amendment) Act, 2025[2], increased the nominees from 1 to 4 in a deposit account, which now allows up to 4 nominees to be designated to receive the deposit in the event of the depositor’s death.

Nomination Facility:

A bank shall offer a nomination facility in deposit accounts in accordance with the provisions of sections 45ZA, 45ZB and 45ZG of the Banking Regulation Act, 1949. During the opening of a deposit account, it is upon the bank to explicitly inform the customer about the purpose and benefits associated in availing the facility, such as simplification in the claim process and smooth transfer of money to the nominee upon the demise of the deceased customer without legal complications.

Option not to make a Nomination:

In a case where a customer chooses not to avail of the nomination facility, the bank shall go ahead with the opening of the deposit account without any limitation after getting a written declaration from the customer to that effect. Additionally, if a customer chooses not to provide a written declaration, the bank shall record the same and proceed to open a deposit account. The Bank shall make sure that there cannot be a delay in opening of the deposit account solely on the ground of refusal to make a nomination.

Nominee Details in Account:

The bank shall record the nomination status on the face of the Statement of Account (Passbook) and Term Deposit Receipt (TDR), with the remark “Nomination Registered”.

Customer Guidance and Publicity:

Banks shall provide guidance to deposit account holders about the benefits associated with the nomination facility and put efforts for wider publicity through compatible messages on cheque books, passbooks and other literature reaching the customers, as well as launching periodical awareness drives.

Incidental Matters:

In a case where the nominee dies prior to receiving funds from the bank, the nomination in respect of such nominee only becomes ineffective and the same shall be governed under the provisions contained in the Reserve Bank of India (Settlement of Claims in respect of Deceased Customers of Banks) Directions, 2025[3] as amended from time to time.

Conclusion:

The Directions strengthen customer protection by ensuring transparency, ease, and efficiency in the nomination process. These measures aim to reduce procedural hardships for families of deceased depositors and promote faster claim settlements across banks.

[1] RBI (Nomination Facility in Deposit Accounts, Safe Deposit Lockers and Articles kept in Safe Custody with the Banks) Directions, 2025

[2] Banking Laws (Amendment) Act, 2025

[3] RBI (Settlement of Claims in respect of Deceased Customers of Banks) Directions, 2025