In a significant move aimed at strengthening nomination rights in banking instruments, the Central Government, through the Ministry of Finance, has notified that key provisions of the Banking Laws (Amendment) Act, 2025 (hereinafter, 2025 Amending Act) will come into force from November 1, 2025.
The 2025 Amending Act, first notified on April 15, 2025, introduced amendments across several critical statutes, including the Reserve Bank of India Act, 1934, Banking Regulation Act, 1949, State Bank of India Act, 1955, and the Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980. These amendments aim to modernize and clarify nomination processes for depositors, locker hirers, and safe custody holders.
The Government notification specifically identifies Sections 10, 11, 12, and 13 of the 2025 Amending Act as coming into effect on November 1, 2025. These sections primarily deal with expanding the scope of nominations and clarifying the order of priority among nominees.
Expanding Nomination Rights
Deposits – Section 10 Under the amended Section 45ZA of the Banking Regulation Act, 1949, depositors can now nominate up to four persons to receive their deposits upon death, replacing the previous restriction to a single nominee.
The amendment provides two options for nomination:
∙ Successive nominations, where only one nominee is recognised at a time, in accordance with the priority rules set out in the newly inserted Section 45ZG. ∙ Simultaneous nominations, which allow depositors to allocate specific percentage shares among up to four nominees.
Safe Custody – Section 11 Previously, under Section 45ZC(1), depositors could nominate only one person to receive articles left in safe custody. The amendment permits up to four successive nominees, offering greater flexibility and reducing potential disputes regarding the transfer of valuables after a depositor’s death.
Lockers – Section 12 Section 45ZE(1) has been revised to allow multiple locker hirers to nominate beneficiaries. Individuals hiring lockers can now nominate up to four persons successively, ensuring that access and removal of locker contents are governed by clear rules in case of the death of the hirer(s).
Priority Rules for Successive Nominations
A new Section 45ZG, inserted by Section 13 of the Amending Act, establishes the priority sequence for successive nominations:
∙ The first nominee in the order specified becomes effective if alive; if deceased, the next nominee in sequence takes effect.
∙ If no priority is indicated, nominees will be recognised in the order listed in the nomination form.
∙ These rules do not apply to simultaneous nominations under Section 45ZA(1). Implications for Banking and Consumers
The amendments are poised to bring greater clarity, flexibility, and legal certainty to the process of nomination in banking instruments. By enabling multiple nominees and clearly defining succession rules, the law seeks to minimize disputes and ensure smooth transfer of rights in the unfortunate event of a depositor’s or hirer’s death.
Banks and financial institutions are expected to update their nomination forms and internal procedures before the enforcement date. Legal experts note that these changes reflect the Government’s ongoing efforts to enhance consumer protection and bring Indian banking laws in line with contemporary practices regarding succession planning. With the November 1 enforcement date approaching, both consumers and banking entities must familiarize themselves with these changes to ensure compliance and seamless execution of nomination rights.
