Bank Nominee Rules Changed: Now Add Up to 4 Nominees – Know How Funds Will Be Shared

The Bank Nominee Rules Changed recently, bringing a major shift in how Indian bank account holders can manage their financial legacy. With the passage of the Banking Laws (Amendment) Bill in March 2025, individuals can now nominate up to four people for their bank accounts, fixed deposits, and bank lockers. This new flexibility is designed to streamline asset transfers, reduce unclaimed funds, and offer more control to depositors.

Whether you’re planning your estate, managing family finances, or simply keeping your bank affairs in order, this article will help you understand the ins and outs of these changes. Let’s break it down in simple language, while still offering the depth professionals and investors expect.

Bank Nominee Rules Changed

The new Bank Nominee Rules are a progressive step in India’s banking system. By allowing up to four nominees and offering multiple nomination formats, the government has empowered individuals to manage their financial affairs more transparently and securely.

Whether you’re a young professional, a retiree, or someone managing joint family finances, these updates make it easier to ensure your hard-earned money goes where you intend.

Take proactive steps today. Speak to your bank, review your existing nominations, and align your estate plan with your financial goals.

Understanding the Change: Why It Matters

Previously, banks allowed only one nominee per account, which often led to disputes among family members or complications in fund distribution after the account holder’s death. This limitation became a bottleneck, especially in joint families or complex inheritance scenarios.

By enabling up to four nominees, the new rule aims to:

• Provide greater flexibility in assigning shares.
• Prevent legal disputes among heirs.
• Reduce unclaimed deposits, which reached a whopping ₹78,213 crore as of March 2024, according to the Reserve Bank of India (RBI).

How the New Nomination System Works

Types of Nominations

Simultaneous Nomination

In this method, all nominees are assigned specific percentages of the account balance. For example:

• Nominee A: 40%
• Nominee B: 30%
• Nominee C: 20%
• Nominee D: 10%

This setup ensures everyone receives a pre-defined share of the funds after the account holder’s death.

Successive Nomination

This works on a priority basis. If the primary nominee is unable to claim (due to death or unavailability), the next in line steps in. For instance:

• Nominee A (Primary)
• Nominee B (Secondary)
• Nominee C (Tertiary)
• Nominee D (Final fallback)

This method is mandatory for bank lockers to avoid conflicts and ensure smooth access to contents.

Practical Example

Imagine Priya, a working professional, wants to manage her savings account effectively. She opts for simultaneous nomination, allocating:

• 50% to her spouse
• 25% to her daughter
• 15% to her son
• 10% to her mother

She fills out the nomination form with these details, ensuring everyone’s role is clear. Later, if she wants to revise the share or nominee, she can update it at any time.

Step-by-Step Guide to Add Multiple Nominees

1. Visit Your Bank: Go to your bank branch or use the online portal (if available).
2. Request Nomination Form: Specifically ask for the updated multi-nomination form.
3. Provide Details:
   • Full name
   • Relationship with the nominee
   • Percentage share or priority
   • Contact and ID details
4. Submit Form: Attach identity proofs (Aadhaar, PAN, etc.) as required.
5. Confirmation: Ask for a stamped acknowledgment or email confirmation.

Legal and Financial Implications

Are Nominees Legal Heirs?

No, nominees are custodians, not necessarily the owners. Their role is to hold the money until it’s legally distributed to rightful heirs unless the nominee is also a legal heir.

This means:

• If a will exists, its terms override nominations.
• Legal heirs can challenge nominations in court.

Tax Considerations

• Money received by nominees may not be taxable if inherited.
• Interest income from those funds, however, is taxable under normal income tax rules.

Cross-Bank Implications

This rule applies across all Indian banks regulated by the RBI, including public sector banks, private banks, and cooperative banks. Ensure your bank has implemented the new format.

Digital and Mobile Banking Inclusion

With the rise in digital banking, several banks have integrated nominee management in their apps and online platforms. For example, SBI, HDFC, and ICICI now allow you to update nominees via net banking.

Common Mistakes to Avoid

• Not updating nominees after major life events (marriage, divorce, etc.)
• Assigning 100% to one person when multiple heirs exist
• Failing to inform family members about the nominations
• Skipping documentation or using outdated forms
• Confusing nomination with ownership

Benefits of the New Nomination Rules

• Better estate planning: Spread your wealth according to wishes
• Reduced family conflict: Clear designation avoids ambiguity
• Less legal hassle: Easier bank processes and faster fund transfer
• Lower unclaimed deposits: Enhances financial inclusion
• Clarity in inheritance: Makes distribution smoother and transparent

Expert Tips for Smart Nomination Planning

• Consult a financial advisor or estate planner for strategic decisions.
• Always create a will alongside nominations to avoid ambiguity.
• Periodically review and revise your nominations, especially if your family structure changes.
• Keep a record of nomination acknowledgments with your personal financial documents.

Frequently Asked Questions About Bank Nominee Rules Changed

Q1: Can I change or remove a nominee later?

Yes, you can update, remove, or replace nominees anytime by submitting a new form.

Q2: What if I don’t nominate anyone?

In such cases, the legal heirs must go through a longer process involving death certificates, legal affidavits, and succession proofs.

Q3: Is digital nomination available?

Many banks now offer online nominee update features. Check with your bank’s digital portal or mobile app.

Q4: What happens if all nominees are deceased?

The funds then go to legal heirs or as per your will.

Q5: Can NRIs be nominees?

Yes, NRIs can be nominated, but they may have to complete additional documentation, especially for fund repatriation.

Q6: Do I need to pay for updating nominations?

No, there is no fee for adding or updating nominees in most banks. It’s a free service mandated by RBI.

Q7: Can joint account holders assign different nominees?

Yes, but both account holders must agree and sign the nomination form.