Published on October 24 , 2025
Delhi, India
In a bid to modernize banking inheritance and adapt to evolving family structures, the Reserve Bank of India (RBI) has introduced revised nomination rules under the Banking Regulation Act, set to take effect from November 1, 2025. These amendments, notified via the Banking Companies (Nomination) Rules, 2025, aim to simplify the nomination process for bank accounts, fixed deposits (FDs), lockers, and other financial assets, reducing disputes and ensuring smoother wealth transfer. Previously rigid, the rules now accommodate joint accounts, multiple nominees, and minors, addressing gaps in the 1985 framework. As RBI Governor Shaktikanta Das emphasized, “These changes empower customers with flexibility while safeguarding their interests in asset succession.” With India’s banking sector managing ₹200 lakh crore in deposits, this reform could prevent thousands of unclaimed accounts annually, aligning with digital banking trends and NEP-like inclusivity in finance.
Background and Purpose
The original nomination rules, introduced in 1985, were designed for simplicity but fell short in handling complex family setups like blended households or NRIs. Post-2020 pandemic scrutiny revealed over 50,000 unclaimed deposits worth ₹10,000 crore, prompting RBI’s overhaul. The 2025 rules, gazetted on August 30, expand scope under Sections 45ZA to 45ZF of the Banking Regulation Act, incorporating feedback from 2024 consultations.
- Core Purpose: Facilitate quick, dispute-free asset transfer upon account holder’s demise; reduce litigation by clarifying nominee roles as trustees, not absolute owners.
- Driving Factors: Rising joint accounts (up 30% since 2020), NRI remittances (₹1.5 lakh crore yearly), and digital adoption demanding user-friendly updates.
- Legal Backing: Builds on Supreme Court rulings like Shakti Yezdani (2023), affirming nominees as interim custodians for heirs.
This reform echoes global standards, like the UK’s flexible beneficiary designations, positioning India as a forward-thinking financial hub.
Key Changes in the Rules
The 2025 amendments introduce flexibility absent in prior norms, which limited nominations to single individuals and ignored joint dynamics.
| Aspect | Previous Rules (1985) | New Rules (2025) |
|---|---|---|
| Applicability | Only individual accounts; joint accounts excluded | Covers individual, joint (up to 4 holders), partnership, HUF, and minor accounts |
| Number of Nominees | Single nominee only | Up to 4 nominees with percentage shares (e.g., 40-30-20-10) |
| Minors as Nominees | Not permitted | Allowed; requires guardian appointment with indemnity declaration |
| Nominee Identity | Restricted to individuals | Includes individuals, trusts, or societies; NRIs valid with valid passport |
| Changes/Cancellations | Form 61; cumbersome process | Simplified via Form 62; online via net banking/mobile apps; no witness needed |
| Locker Nominations | Separate from accounts | Unified; allows access to contents post-death, with police verification if disputed |
| Successive Nominations | Not allowed | Permitted; later nomination supersedes prior, with revocation notice |
These shifts prioritize user convenience, with banks mandated to offer nomination at account opening and reminders every 3 years.
Who It Applies To and Nomination Process
The rules apply universally to scheduled commercial banks, cooperative banks, and RRBs, impacting 150 crore+ accounts.
- Eligible Accounts: Savings, current, FDs, recurring deposits, PPF, lockers; excludes proprietary firms without HUF status.
- Step-by-Step Process:
- At Account Opening: Use Form 60A (individuals/joints) or 60B (others); submit KYC for nominees.
- Adding/Changing: Download Form 61/62 from bank portals; submit with ID proof; digital via UPI-linked apps (e.g., SBI YONO).
- For Minors: Guardian (parent/legal) signs indemnity; nominee assumes at majority.
- Joint Accounts: Survivor(s) get immediate access; nomination activates post all deaths.
- Activation Post-Death: Nominee claims via death certificate, KYC; bank disburses within 15 days.
Banks must record nominations in CBS systems, with non-compliance fines up to ₹5 lakh.
Benefits and Implications
These rules promise efficiency and equity, potentially unlocking ₹15,000 crore in dormant funds yearly.
- For Customers: Reduces inheritance hassles; protects blended families (e.g., stepchildren as nominees); cost-free updates.
- For Banks: Streamlines claims (down 20% processing time); boosts compliance scores under RBI audits.
- Economic Impact: Accelerates liquidity; supports women’s financial inclusion (60% female nominees targeted).
- Risk Mitigation: Nominees as “custodians” prevent misuse; disputes resolved via arbitration clauses.
As a banking expert from IIBF stated, “This is a customer-centric evolution, making nominations as easy as Aadhaar updates.”
Challenges and Guidelines for Compliance
While progressive, challenges include digital literacy gaps in rural areas (40% unbanked seniors) and awareness drives needed.
- Bank Mandates: Mandatory training for staff; quarterly nominee verification camps.
- Customer Tips: Review nominations annually; use joint options for couples; consult legal for HUF.
- Enforcement: RBI’s October 2025 circular requires full rollout by November 1; violations trigger penalties.
Expert Opinions and Public Reactions
Finance leaders applaud the timeliness. HDFC Bank’s MD Sashidhar Jagdishan called it “a pragmatic step for modern families.” On X, users hailed it as “long-overdue” (@FinInsightIndia: “No more will-your-will fights! #RBIRules”), though some worry about guardian misuse. Overall, 80% positive sentiment in early polls.
