Bank account, bank locker rule change:
Lok Sabha passes new Banking Amendment Bill, allowing up to 4 nominees in savings, locker accounts
Dec 12, 2024
Synopsis
The Lok Sabha recently passed the Banking Laws (Amendment) Bill, which allows adding multiple nominees for bank accounts and lockers.While this awaits Rajya Sabha approval, read in this story to know how many nominees you can add in your bank account and lockers, and what are the advantages of nomination.
The Lok Sabha passed the Banking Laws (Amendment) Bill on December 3, 2024, allowing bank account holders to name up to four nominees for their savings and locker accounts. The new amendment will help bank customers to nominate up to 4 nominees in their bank accounts, fixed deposits and recurring deposits.
For the new banking law to be effective, it needs to be passed by Rajya Sabha. Once it is passed by both houses of Parliament, the president will give an approval indicating the effective date of this change.
One of the main features of the proposed amendment is that it replaces the existing single-nominee system for bank accounts or fixed deposits by allowing depositors to designate up to four people. The aim is to make it easier to distribute funds after the death of any bank account user, which was a challenge during the COVID-19 pandemic.
Nomination in bank deposits, mutual funds and other financial assets makes it possible to release funds from the account holder’s account or locker faster and easier without the requirement of a succession certificate or will.
Nominees in bank savings, locker accounts raised from one to four
Nominees can access the bank deposits, articles, or locker items in case of death of the accountholder. The proposed amendment allows nominees to be appointed successively or simultaneously for bank deposits, but they can only be appointed sequentially for other purposes. When multiple nominees are nominated at the same time, the nomination will take effect in a predetermined proportion. For subsequent nominations, the nominee who was named higher in the order of nomination will get priority.
According to the Banking Laws (Amendment) Bill, 2024, “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.”
What is nomination in a bank account?
According to the Reserve Bank of India, “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).”
[The Economic Times]
