According to reports from Mint, the Banking Laws (Amendment) Act, 2025 and the Banking Companies (Nomination) Rules, 2025, effective from 1 November 2025, allow eligible bank depositors to nominate up to four individuals for bank deposits. These nominations can be structured as either 'simultaneous', where every nominee receives a specified percentage, or 'successive', where nominees are placed in a specific order. Section 45ZG of the Banking Regulation Act, 1949, governs successive nominations, stating that when nominees are named in a specified order, a subsequent nominee becomes effective when the nominee placed ahead of them dies before the depositor.
As reported by Mint, in successive nomination cases, when a nominee dies before the primary account holder, the next nominee in the specified order automatically becomes effective without requiring a fresh nomination. The deceased nominee's share does not automatically pass to their legal heirs or family members, but instead, the relevant portion is treated as having no effective nomination and must be resolved through the applicable procedure for claims relating to deceased depositors. The RBI's Settlement of Claims in respect of Deceased Customers of Banks Directions, 2025, provides a framework for banking institutions to settle such claims and standardise documentation requirements.
According to Mint reports, in simultaneous nomination cases, if one nominee dies before receiving the deposit, that individual nominee's nomination alone becomes ineffective. The portion of that deceased nominee is treated as if no nomination had been made for that particular portion, while surviving nominees continue to receive their specified shares. A nominee's role is primarily to facilitate deposit receipt from the bank, and a simple nomination does not determine the ultimate beneficiary or provide ownership clarity regarding deceased depositors' funds.
As reported by Mint, where entitlement is disputed or legal representation is required, documents such as court-provided succession certificate, probate, letter of administration, or court order may be sought depending on the facts and circumstances of the case. Account holders are advised to diligently review their nominations and understand applicable rules and regulations, as these are bound to change over time. When faced with such situations, seeking guidance from legal professionals ensures proper compliance with banking regulations and long-term financial well-being.
