New Delhi: In a major step toward improving transparency, uniformity, and efficiency in claim settlements, the Ministry of Finance has announced that bank customers can now nominate up to four individuals for their deposit accounts. The new provision, introduced under the Banking Laws (Amendment) Act, 2025, will take effect from November 1, 2025, the ministry said on Thursday.
The Banking Laws (Amendment) Act, 2025, which was notified on April 15, 2025, empowers the Central Government to implement different provisions of the Act on separate dates through notifications in the Official Gazette. The legislation brings 19 key amendments across five major banking laws, including the Reserve Bank of India Act, 1934, Banking Regulation Act, 1949, State Bank of India Act, 1955, and the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980.
Key Provisions Under the New Nomination Rules
- Multiple Nominations: Depositors can nominate up to four persons for their accounts, either simultaneously or successively, simplifying claim settlements.
- Simultaneous Nomination: Account holders may specify the percentage of entitlement for each nominee, ensuring a clear and transparent distribution of funds totaling 100%.
- Successive Nomination: In this option, the next nominee becomes effective only upon the death of the one ranked higher, providing continuity and clarity in succession.
- Safe Custody and Locker Facilities: For articles in safe custody or lockers, only successive nominations will be allowed.
The Banking Companies (Nomination) Rules, 2025 — which will outline procedures and forms for making, cancelling, or modifying multiple nominations — are expected to be published shortly, ensuring uniform implementation across all banks.
“The implementation of these provisions will give depositors greater flexibility to make nominations as per their preference while ensuring transparency and efficiency in claim settlement across the banking system,” the Ministry of Finance stated.
Other Major Amendments Under the Act
The Ministry, through a notification issued on July 29, 2025, had already brought several key provisions of the Act into effect from August 1, 2025, including Sections 3, 4, 5, 15, 16, 17, 18, 19, and 20. These amendments include:
- Investor Protection: Public Sector Banks (PSBs) can now transfer unclaimed shares, interest, and bond redemption amounts to the Investor Education and Protection Fund (IEPF), aligning practices with the Companies Act.
- Audit Standards: Banks have been empowered to offer remuneration to statutory auditors, allowing for the engagement of high-quality professionals and enhancing audit integrity.
- Substantial Interest Threshold: The definition of substantial interest has been updated — the threshold has been raised from ₹5 lakh to ₹2 crore, marking the first revision since 1968.
- Cooperative Bank Governance: The tenure of directors in cooperative banks (excluding chairpersons and whole-time directors) has been increased from 8 years to 10 years, in alignment with the 97th Constitutional Amendment.
Strengthening Governance and Customer Protection
The Banking Laws (Amendment) Act, 2025 aims to strengthen governance, standardize reporting by banks to the RBI, and enhance depositor and investor protection. By introducing flexible nomination rules and improving oversight, the Act seeks to promote greater customer convenience and accountability in India’s banking sector.