RBI Mandates Banks to Inform Customers About Nomination Facility from November 2025

The Reserve Bank of India (RBI) has notified the Banking Companies (Nomination) Rules, 2025, and Banking Laws (Amendment) Act, 2025, bringing significant changes to banking procedures effective November 1, 2025. These rules are designed to enhance transparency and streamline the process of fund transfers following the death of a depositor.

Banks are now mandated to proactively inform customers about the nomination facility when they open any deposit account, locker, or safe custody service. The benefits, such as simplifying claims and ensuring smooth fund transfer without legal delays, must be clearly explained. Although nomination is optional, banks must offer customers the choice to nominate or opt out without impacting their eligibility to open an account. If a customer chooses not to nominate, they must provide a written declaration confirming this decision. If the customer refuses to sign, banks must record this refusal.

The regulations also address scenarios with multiple nominees. If one nominee dies before the depositor, that nomination becomes invalid, and banks must follow the RBI's Settlement of Claims Directions for situations without a valid nomination.

For enhanced transparency, banks are instructed to record the nomination status and the nominee's name(s) directly on passbooks, account statements, and term deposit receipts. Furthermore, banks must establish robust systems for managing nominations, including registration, cancellation, and modification, and issue acknowledgements for all related requests within three working days. Any rejection of a nomination request must be communicated to the customer in writing within the same period, stating the reasons.

Impact This regulatory update will likely lead to smoother claims processing for beneficiaries, reducing potential legal disputes and delays. Banks will need to update their operational procedures and customer onboarding processes to comply, potentially increasing operational efficiency in the long run and enhancing customer trust. Impact Rating: 7/10

Difficult Terms Nomination Facility: A provision allowing an account holder to designate a person (nominee) to receive account funds or assets after their death. Safe Custody Services: Services offered by banks for securely storing customers' valuable items or important documents. Written Declaration: A formal, signed written statement by a customer confirming a decision or acceptance of terms. Discharge: Legal release from an obligation. For banks, payment to a valid nominee can serve as a legal discharge from liability. Claim Settlement: The process by which beneficiaries receive funds or assets from an account after the account holder's demise.