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The central government has officially notified the Banking Laws (Amendment) Act, 2024, introducing key changes in the way nominations work for bank accounts. One of the most important updates is that account holders can now name up to four nominees for their bank accounts, locker contents, and safe custody items.
While the Act was passed and received Presidential assent on April 15, 2025, the actual implementation date for different provisions will be announced separately.
Key Legislative Changes
This amendment touches several important banking laws:
- Reserve Bank of India Act
- Banking Regulation Act
- State Bank of India Act
- Banking Companies (Acquisition and Transfer of Undertakings) Act
The government has clarified that these changes do not relate to reducing its stake in public sector banks (PSBs) or pushing for their privatisation.
What’s New in Nominations?
Under the new law:
- Up to four nominees can be assigned for each deposit, locker, or item in bank custody.
- Currently, only one nominee is allowed.
- Account holders can:
- Assign priority to nominees (where only one nominee is considered at a time based on survival), or
- Divide shares among the four nominees.
In the priority mode, the nomination becomes effective in sequence—if the first nominee is alive, they get the rights. If not, it passes to the second nominee, and so on.
This priority mechanism will also apply to lockers and safe custody items.
Reducing Unclaimed Deposits
One major goal of this amendment is to reduce the rising volume of unclaimed bank deposits, which occur often due to the death of account holders without a nominee. Unclaimed deposits—those untouched for 10 years—are transferred by banks to the RBI’s Depositor Education and Awareness Fund (DEAF).
Between 2019-20 and December 31, 2024, public sector banks transferred over ₹45,000 crore in unclaimed funds to this fund. Despite this, depositors or their legal heirs can still claim these funds from the original bank along with applicable interest.
Other Important Amendments
- The tenure of directors (excluding chairman and full-time directors) in cooperative banks has been increased from 8 to 10 years, aligning with the 97th Constitutional Amendment.
- Directors of central cooperative banks can now serve on the board of state cooperative banks.
- Banks now have more flexibility in deciding the remuneration for statutory auditors.
- The regulatory reporting dates for banks will now be shifted to the 15th and last day of each month, instead of the earlier second and fourth Fridays.
Download banking laws Amendment bill 👇
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