India Introduces New Banking Law Allowing Multiple Nominees for Deposits and Lockers

A significant shift is occurring in India's banking sector with the implementation of the Banking Laws (Amendment) Act, 2025, effective from this month. This amendment modernizes the process for transferring bank deposits and locker contents by allowing depositors to appoint multiple nominees, moving away from the older single-nominee framework. Previously, the restriction to one nominee often resulted in inheritance disputes, delays in claim settlements, and a substantial rise in unclaimed bank deposits.

The new rules permit depositors to nominate up to four individuals, providing greater flexibility to accommodate diverse family structures and clearer distribution intentions. The Act also introduces two nomination modes: simultaneous nomination, where multiple nominees can act together, and sequential nomination, for orderly asset transfer.

Impact: This reform is anticipated to yield several benefits: faster claim settlements, often eliminating the need for legal certificates; a reduction in unclaimed deposits; fewer disputes among heirs due to clearly recorded intentions; and standardized claim processing across public, private, and cooperative banks. It is expected to enhance operational efficiency for banks and reduce emotional distress for families during succession.

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Difficult Terms: * **Banking Laws (Amendment) Act, 2025**: A new law passed in India that revises existing banking regulations to introduce modern practices, particularly regarding customer nominations and asset transfers upon death. * **Nomination Process**: The official procedure by which an account holder or locker user designates a person or persons to inherit their assets or contents after their demise. * **Succession Certificates**: Legal documents issued by a court that confirm a person's legal right to an estate. The new law aims to reduce the necessity for these in many cases. * **Unclaimed Deposits**: Funds held in bank accounts or financial products that have remained inactive and untouched by the rightful owner for an extended period. * **Simultaneous Nomination**: A nomination arrangement where all named nominees have the authority to act jointly on the assets. * **Sequential Nomination**: A nomination system where nominees are listed in a specific order of priority; the first nominee takes precedence, followed by subsequent nominees if the first is unable to act. * **Investor Education and Protection Fund (IEPF)**: A government fund established to promote investor awareness and education, and to refund unclaimed money to investors. * **Core Banking System (CBS) Software**: The integrated software system used by banks to manage all customer accounts, transactions, and operations centrally across all branches. * **Succession Planning**: The strategic arrangement and process of transferring a person's assets and responsibilities to designated beneficiaries after their death.