Banking Laws (Amendment) Act, 2025 - New Bank Nomination Rules Effective 1 November 2025

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 🏦 New Bank Nomination Rules Effective 1 November 2025

A Detailed Analysis of the Banking Laws (Amendment) Act, 2025



Published: 23 October 2025
Source: Gazette of India | PIB Delhi | Ministry of Finance

🔷 Introduction

The Banking Laws (Amendment) Act, 2025 marks one of the most significant overhauls in India’s banking legislation in recent years, aimed at improving customer convenience, transparency in claim settlements, and depositor protection.

Among its various provisions, the amendments relating to nomination facilities for bank deposits, safe custody articles, and safety lockers are set to take effect from 1 November 2025, as per the Gazette Notification S.O. 4789(E) dated 22 October 2025.

These changes will benefit millions of depositors by introducing multiple nomination options, clear succession rules, and uniform standards across all banks.

🔷 Background: The Banking Laws (Amendment) Act, 2025

The Act (No. 16 of 2025), notified on 15 April 2025, introduced 19 amendments spanning five core banking legislations:

  1. Reserve Bank of India Act, 1934

  2. Banking Regulation Act, 1949

  3. State Bank of India Act, 1955

  4. Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970

  5. Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980

While several administrative and governance provisions were enforced on 1 August 2025, the nomination-related reforms under Sections 10, 11, 12, and 13 will come into operation on 1 November 2025.

🔷 Objective of the Amendment

The overarching intent is to:

  • Empower depositors with flexible nomination options

  • Eliminate procedural ambiguity during claim settlements

  • Harmonize nomination processes across banking institutions

  • Reduce litigation and succession-related disputes

  • Promote transparency and administrative efficiency

🔷 Legal Foundation of Nomination Provisions

The amendments primarily affect Chapter V-A of the Banking Regulation Act, 1949, which governs nomination in relation to:

  • Deposit Accounts (Section 45ZA)

  • Articles kept in Safe Custody (Section 45ZC)

  • Safety Lockers (Section 45ZE)

A new Section 45ZG has also been inserted to define the priority of successive nominees.

🔷 Key Provisions in Detail

1. Section 10 — Amendment of Section 45ZA (Deposits Nomination)

✅ Previous Position:

  • A depositor could nominate only one person.

🆕 New Provision:

  • A depositor may nominate one or more persons not exceeding four, either:

    • Successively (one after another), or

    • Simultaneously (all at once, with specific share percentages).

🧾 New Sub-sections Inserted:

(1A) – Successive Nominations

  • Effective in favor of only one nominee at a time, following the priority order defined under Section 45ZG.

(1B) – Simultaneous Nominations

Nomination can be made in favor of up to four nominees simultaneously, subject to these conditions:

  • (a) Not more than four nominees.

  • (b) Proportion of deposit for each nominee must be stated clearly (total = 100%).

  • (c) Must cover the entire deposit amount.

  • (d) If any nominee dies before receiving payment, that portion is deemed “no nomination”.

Non-compliance with any of the above renders the nomination invalid.

2. Section 11 — Amendment of Section 45ZC (Safe Custody Articles)

✅ Before:

  • Only one nominee allowed.

🆕 Now:

  • Depositor may nominate up to four persons, successively.

  • Successive nomination means that upon death of the first nominee, the next becomes effective, and so on.

  • Simultaneous nomination is not permitted for safe custody articles.

3. Section 12 — Amendment of Section 45ZE (Safety Lockers)

✅ Before:

  • One nominee allowed for lockers.

🆕 Now:

  • Locker hirers may nominate up to four persons successively.

  • Upon the death of hirer(s), the bank will:

    • Grant access to locker, and

    • Allow removal of contents to the surviving nominee in sequence.

  • Simultaneous nomination is not permitted for lockers.

4. Section 13 — Insertion of Section 45ZG (Priority of Successive Nominations)

A new Section 45ZG clarifies the order of priority when multiple nominations are made successively.

📜 Priority Rules:

  1. The first nominee’s right becomes effective if alive at the time of depositor’s death.

  2. The second nominee’s right activates only after the death of the first.

  3. Each lower nominee’s right arises only upon the death of all nominees above.

  4. If no order is specified, the sequence of names on the form determines priority.

  5. Does not apply to simultaneous nominations, where distribution is already percentage-based.

🔷 Legal Mechanism: The Banking Companies (Nomination) Rules, 2025

To ensure uniformity and standardization, the Central Government will notify the Banking Companies (Nomination) Rules, 2025 shortly.
These rules will prescribe:

  • Standard forms for making, modifying, or cancelling nominations

  • Procedures for claim settlement

  • Formats for proportion declaration and succession order

This will enable seamless adoption across all scheduled and cooperative banks.

🔷 Implementation Timeline

DateEventGazette Notification
15 April 2025Act assented by PresidentGazette Notification (No. 16 of 2025)
29 July 2025First set of sections (3–5, 15–20) notified (effective 1 Aug 2025)S.O. 3494(E)
22 October 2025Nomination provisions (Sections 10–13) notified (effective 1 Nov 2025)S.O. 4789(E)
1 November 2025Multi-nomination system comes into force–

🔷 Practical Implications for Banks & Depositors

StakeholderImplications
DepositorsCan now nominate up to four individuals for deposits, ensuring clarity and flexibility in succession.
BanksMust update core banking systems, forms, and locker management protocols to handle multi-nomination structures.
Legal HeirsReduced disputes and faster claim processing due to predefined proportionate entitlements.
RegulatorsEnhanced transparency and uniformity in reporting across banks.

🔷 Compliance & Operational Preparations

Banks are expected to:

  • Issue internal circulars before 1 November 2025

  • Replace old nomination forms with revised multi-nomination versions

  • Reconfigure CBS (Core Banking Solutions) to record up to four nominees per account

  • Conduct staff training for handling simultaneous vs. successive nominations

  • Update locker and safe custody agreements accordingly

🔷 Policy Significance

This reform signifies a paradigm shift in how Indian banks handle succession and claims.
By aligning with global best practices and depositor convenience standards, the amendment:

  • Promotes customer-centric banking

  • Reduces litigation risks

  • Strengthens governance and transparency

  • Simplifies intergenerational transfer of financial assets

🔷 Conclusion

Effective 1 November 2025, depositors in India will enjoy unprecedented flexibility in deciding how their banking assets are transferred after their lifetime.
Through the introduction of multiple nominations (up to four), successive priority structures, and clear percentage-based sharing, the Banking Laws (Amendment) Act, 2025 ensures that financial inheritance becomes more transparent, uniform, and secure.

It represents a major step forward in India’s journey toward a modernized, depositor-friendly banking system.

📎 References

  1. The Banking Laws (Amendment) Act, 2025 (No. 16 of 2025) – Gazette of India, 15 April 2025

  2. Gazette Notification S.O. 3494(E) – 29 July 2025

  3. Gazette Notification S.O. 4789(E) – 22 October 2025

  4. PIB Press Release, 23 October 2025 – Ministry of Finance, Government of India

✍️ Author’s Note

This article is prepared for educational and compliance awareness purposes by Compliance Monk — empowering professionals with clarity in legal and regulatory reforms.

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Location: Mumbai, Maharashtra, India

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