Bank Account Nominee Rules Revised: Up to Four Nominees Allowed
In a significant move to enhance the flexibility and clarity of asset distribution, the Indian Parliament has passed the Banking Laws (Amendment) Bill, 2024. This legislation permits bank account holders to nominate up to four individuals for their accounts, a substantial increase from the previous allowance of a single nominee. The amendment aims to reduce inheritance disputes and decrease the volume of unclaimed deposits in banks.
Understanding the New Nomination Methods
The revised law introduces two distinct methods for nominating beneficiaries:
- Simultaneous Nomination: Account holders can allocate specific percentages of their total deposit to multiple nominees. For instance, if an account holds ₹10 lakh, the depositor might designate 40% to their spouse and 30% each to two children. Upon the account holder’s demise, the funds would be distributed accordingly, ensuring that each nominee receives the predetermined share.
- Successive Nomination: This approach establishes a priority sequence among nominees. The first nominee in the order is the primary beneficiary. If this individual is unable or unwilling to claim the funds, the entitlement passes to the second nominee, and so forth. This method ensures a clear line of succession for accessing the account’s funds.
Application to Bank Lockers
The amendment also addresses the nomination process for bank lockers. Unlike deposit accounts, where both simultaneous and successive nominations are permitted, bank lockers will only allow successive nominations. This means that if the primary nominee is unavailable, the next in line will be eligible to access the locker, thereby preventing potential disputes and ensuring a smooth transfer of access rights.
Implications for Account Holders
By enabling multiple nominations, the amendment provides depositors with greater control over the distribution of their assets. This change is expected to minimize conflicts among heirs and reduce the incidence of unclaimed deposits. According to the Reserve Bank of India’s annual report, unclaimed deposits surged by 26%, from ₹62,225 crore in March 2023 to ₹78,213 crore in March 2024. Allowing multiple nominees is anticipated to address this growing concern effectively.
Account holders are encouraged to review and update their nomination details in accordance with the new provisions to ensure their assets are distributed as per their wishes.
