The Government has introduced a new Law – The Banking Laws (Amendment) Bill 2024, which aims to allow multiple nominees for bank fixed deposits (FDs). This Bill is expected to be introduced in Parliament’s Winter Session, which will start from 15 November 2024. The bill was first presented in the Monsoon Session earlier this month but could not be discussed at that time. Click here to download Banking Laws Amendment Bill 2024 PDF.
The proposed amendment will enable depositors to name up to four nominees for their fixed deposit accounts, a significant increase from the current limit of one nominee. This change is designed to simplify the distribution of funds in the event of the death of a primary earner.
The bill introduces two types of nominations: simultaneous and successive. Under the simultaneous nomination, the depositor can specify the percentage of the FD to be claimed by each nominee. In contrast, the successive nomination allows for one active nominee, with subsequent nominees taking effect upon the death of the previous one.
Download PDF: Click here to download Banking Laws Amendment Bill 2024 PDF
Simultaneous Nomination in Bank FD
This system allows depositors to name multiple nominees (up to four) and assign a percentage share for each. All nominees are active at the same time. The depositor specifies the percentage of the deposit that each nominee will receive. Example: A depositor may allocate 50% of the FD to their spouse and 25% each to their two children. In case of the depositor’s death or inability to claim the FD, these percentages are used to distribute the funds.
Successive Nomination in Bank FD
Under this system, a depositor can appoint nominees in a specific order of priority. Only one nominee is active at a time, with the next nominee taking over in case of the first nominee’s death or incapacity. This method ensures that the entire FD amount is transferred to a nominee in specific situations. Nominees are listed in a priority sequence. Only one nominee is active at a time. If the first nominee passes away or cannot claim the funds, the next nominee in line becomes eligible.
Example: If the depositor names their spouse as the first nominee and their child as the second, the spouse will be entitled to the FD first. Upon their passing, the child will inherit the right to claim the FD.
Download PDF: Click here to download Banking Laws Amendment Bill 2024 PDF
