Beginning November 1, 2025, Indian bank customers will be able to nominate up to four individuals for their deposit accounts, a significant shift designed to streamline and clarify the process of claim settlements. This reform, introduced under the Banking Laws (Amendment) Act, 2025, is poised to impact millions of account holders, offering them unprecedented flexibility and security in managing the future of their savings and valuables.
The Ministry of Finance, in its October 23 announcement, described the move as a step toward “uniformity, transparency, and efficiency in claim settlement across the banking system,” according to Business Today. The new rules come after the Act was officially notified on April 15, 2025, and form part of a broader package of 19 amendments spanning five cornerstone pieces of banking legislation: the Reserve Bank of India Act, 1934; the Banking Regulation Act, 1949; the State Bank of India Act, 1955; and the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980.
So, what exactly is changing for the average account holder? Previously, customers could typically nominate only one person to inherit the funds or valuables in a bank account, locker, or safe custody arrangement. This often led to complications—imagine a scenario where the sole nominee passed away before a claim could be settled, leaving families mired in legal tangles and delays. Now, with the new provisions, customers can nominate up to four people, either all at once (simultaneous nomination) or in a sequence (successive nomination), giving families more certainty and reducing the risk of disputes or court battles.
Under the simultaneous nomination option, a depositor can specify the percentage share each nominee will receive, as long as the total adds up to 100%. For example, a person with ₹10 lakh in savings might allocate 50% to a spouse, 30% to a child, and 20% to a sibling. This clear division helps ensure that the depositor’s wishes are honored and that funds are distributed quickly and transparently. In the case of successive nominations, the next nominee in line becomes eligible to claim only after the death of the nominee ranked higher. This method offers a straightforward succession plan, minimizing confusion during already stressful times.
For articles placed in safe custody or in bank lockers, the rules are slightly different: only successive nominations are permitted. This means that valuables will pass down the line of nominees one after the other, rather than being split among them, ensuring continuity and clarity of succession. As the Ministry of Finance explained, “The implementation of these provisions will give depositors the flexibility to make nominations as per their preference, while ensuring uniformity, transparency, and efficiency in claim settlement across the banking system.”
To operationalize these changes, the government will soon publish the Banking Companies (Nomination) Rules, 2025. These rules will lay out the exact procedures and prescribed forms for making, cancelling, or modifying multiple nominations, ensuring that all banks across the country follow a standard process. The Ministry has stated that these measures are intended to “simplify and speed up claim settlements for depositors and their families,” as reported by India Today.
The reforms go beyond just nomination. On July 29, 2025, the government issued a notification bringing several other provisions of the Amendment Act into effect from August 1, 2025. Among these are changes aimed at strengthening governance and boosting depositor and investor protection. Public sector banks (PSBs) are now empowered to transfer unclaimed shares, interest, and bond redemption amounts to the Investor Education and Protection Fund (IEPF), a practice previously followed by companies under the Companies Act. This move, according to the Finance Ministry, aligns the banking sector with best practices in corporate governance and investor protection.
Another major change is in the area of audit standards. PSBs can now offer remuneration to statutory auditors, a measure designed to attract high-quality professionals and enhance audit integrity. This is seen as a move to improve oversight and accountability within the sector, a long-standing demand of both investors and regulators.
There’s also a notable update to the definition of “substantial interest.” The threshold has been raised from ₹5 lakh to ₹2 crore, the first such revision since 1968. This change is expected to reflect the realities of today’s banking landscape, where the scale of operations and investments has grown exponentially over the decades.
For cooperative banks, the tenure of directors (excluding chairpersons and whole-time directors) has been increased from eight to ten years, bringing these institutions in line with the 97th Constitutional Amendment. This adjustment is intended to promote stability and experienced leadership in the cooperative banking sector, which serves a vast swathe of India’s rural and semi-urban population.
All these amendments, as the Finance Ministry emphasizes, are part of a broader push to “strengthen governance standards in the banking sector, ensure uniformity in reporting by banks to the Reserve Bank of India, enhance depositor and investor protection, improve audit quality in public sector banks, and promote customer convenience through improved nomination facilities.”
For everyday customers, the most immediate and tangible benefit will be the ability to ensure that their savings and valuables are more easily and accurately passed on to their chosen beneficiaries. The flexibility to name up to four nominees—whether all at once or in a specific order—means that families are less likely to face delays, disputes, or legal complications when settling claims. As Kashmir Observer pointed out, this “small change” could have a “big impact for families, giving you peace of mind that your hard-earned savings are protected.”
Looking ahead, the publication of the detailed Banking Companies (Nomination) Rules, 2025 will be crucial in determining exactly how these new provisions are implemented on the ground. Customers and banks alike will need to adapt to the new procedures, but the hope is that the long-term benefits—greater clarity, faster settlements, and fewer disputes—will far outweigh any initial adjustments.
As India’s banking sector continues to modernize and adapt to evolving customer needs, these reforms mark a significant milestone. By prioritizing flexibility, transparency, and governance, the Banking Laws (Amendment) Act, 2025 aims to build a more resilient and customer-friendly financial system for the years to come.
