New bank account, bank locker rules soon! The Banking Laws (Amendment) Bill received approval in the Lok Sabha on December 3, 2024, introducing provisions for account holders to designate up to four nominees for their savings accounts and lockers. This modification enables customers to appoint multiple nominees for various banking products, including fixed and recurring deposits.
The legislation requires Rajya Sabha to pass it. Following approval from both parliamentary houses, presidential assent will establish the implementation date for these modifications.
New Bank Account, Bank Locker Rules
- A significant aspect of this legislative change involves the transition from the current single-nominee arrangement to a system permitting up to four nominees for banking accounts and fixed deposits.
- This revision aims to simplify the process of fund distribution following an account holder’s demise, addressing difficulties encountered during the COVID-19 crisis.
- The nomination facility in banking deposits, mutual funds and additional financial instruments facilitates quicker and straightforward release of assets from accounts or lockers, eliminating the need for succession certificates or testamentary documents.
- Bank account nominees have the authority to access deposits, articles, or locker contents following the accountholder’s death. The new amendment permits multiple nominees for bank deposits, who can be designated either successively or simultaneously.
- However, for other banking services, nominees must be appointed in sequence. For simultaneous nominations, the assets will be distributed according to specified proportions. In cases of sequential nominations, precedence is given to nominees listed higher in the nomination order.
The Banking Laws (Amendment) Bill, 2024 states: “The Banking Regulation Act allows single or joint deposit holders to appoint a nominee for their deposit. Such a nominee can also be appointed for items left in custody of a bank or for a locker hired from a bank. The nominee can access the deposit, articles, or locker in case of death of the person who nominated him. The Bill allows the appointment of up to four nominees for these purposes. For deposits, such nominees can be appointed either successively or simultaneously while for other purposes they can be appointed successively. In case of simultaneous nominees, the nomination will be effective in a declared proportion. For successive nomination, the nominee who has been named higher in the order of nomination will receive priority.”
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The Reserve Bank of India defines nomination as follows: “Nomination is a facility that enables a deposit account holder(s) (individual or sole proprietor) or safe deposit locker holder(s) to nominate an individual, who can claim the proceeds of the deposit account(s) or contents of the safe deposit locker(s), post the demise of the original depositor(s) or locker holder(s).”
