
The Ministry of Finance on Thursday announced that a bank customer can opt for up to four nominees in her or his account beginning next month. The move is taken with a view to ensure uniformity, and efficiency in claim settlement across the banking system. The key provisions relating to Nomination under the Banking Laws (Amendment) Act, 2025 will come into effect from November 1, 2025.
The Banking Laws (Amendment) Act, 2025 was notified on April 15, 2025, containing 19 amendments across five legislations - the Reserve Bank of India Act, 1934, Banking Regulation Act, 1949, State Bank of India Act, 1955 and Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and 1980.
The Finance Ministry will publish the Banking Companies (Nomination) Rules, 2025, detailing the procedure and prescribed forms for making, cancelling, or specifying multiple nominations, to operationalise these provisions uniformly across all banks.
Earlier, the central government had appointed August 1, 2025 as the date on which certain provisions of the said Amendment Act, namely Sections 3, 4, 5, 15, 16, 17, 18, 19 and 20, came into force vide Gazette Notification S.O. 3494(E) dated 29th July 2025.
The Act also provides for rationalisation of the tenure of directors, other than the Chairman and whole-time directors, in co-operative banks, the government said.
Earlier on July 29, the ministry notified amendments to the Banking Laws (Amendment) Act, 2025. This amendement allows public sector banks (PSBs) to transfer unclaimed shares, interest, and bond redemption amounts to the Investor Education and Protection Fund (IEPF), bringing them in line with practices followed by companies under the Companies Act.
The amendments also empower the banks to offer remuneration to statutory auditors, facilitating the engagement of high-quality audit professionals and enhancing audit standards, the Finance Ministry had said in a notification.
Besides this, the gazette notification dated July 29 has also enhanced the threshold of 'substantial interest' from Rs 5 lakh to Rs 2 crore.
The threshold of 'substantial interest' has been amended after 1968.
Additionally, the ministry had said that the notification aligns director tenures in cooperative banks with the 97th Constitutional Amendment by increasing the maximum tenure from 8 years to 10 years, excluding the chairperson and whole-time director.
The Banking Laws (Amendment) Act, 2025 was notified on April 15, 2025, containing 19 amendments across five legislations - the Reserve Bank of India Act, 1934, Banking Regulation Act, 1949, State Bank of India Act, 1955 and Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and 1980.
Under the new amendements, the banking experience will undergo following changes:
- Multiple Nominations: Customers can now nominate up to four persons, either simultaneously or successively. This move aims to simplify claim settlement for depositors and their nominees.
- Nomination for Deposit Accounts: Depositors can now choose between simultaneous or successive nominations, as per their preference.
- Nomination for Articles in Safe Custody and Safety Lockers: For locker facility and safe custody, banks will only permit successive nominations.
- Simultaneous Nomination: Depositors can now nominate up to four persons and specify the share or percentage of entitlement for each nominee. During this process, they must ensure that the total equals 100 percent.
- Successive Nomination: Individuals maintaining deposits, articles in safe custody, or lockers can now specify up to four nominees. But, the next nominee becomes operative only upon the death of the nominee placed higher.
The Finance Ministry will publish the Banking Companies (Nomination) Rules, 2025, detailing the procedure and prescribed forms for making, cancelling, or specifying multiple nominations, to operationalise these provisions uniformly across all banks.
Earlier, the central government had appointed August 1, 2025 as the date on which certain provisions of the said Amendment Act, namely Sections 3, 4, 5, 15, 16, 17, 18, 19 and 20, came into force vide Gazette Notification S.O. 3494(E) dated 29th July 2025.
Why Banking Laws (Amendment) Act, 2025?
The Banking Laws (Amendment) Act, 2025 aims to strengthen governance standards in the banking sector. The government is willing to ensure uniformity in reporting by banks to the RBI, enhance depositor and investor protection, improve audit quality in public sector banks, and promote customer convenience through improved nomination facilities.The Act also provides for rationalisation of the tenure of directors, other than the Chairman and whole-time directors, in co-operative banks, the government said.
Earlier on July 29, the ministry notified amendments to the Banking Laws (Amendment) Act, 2025. This amendement allows public sector banks (PSBs) to transfer unclaimed shares, interest, and bond redemption amounts to the Investor Education and Protection Fund (IEPF), bringing them in line with practices followed by companies under the Companies Act.
The amendments also empower the banks to offer remuneration to statutory auditors, facilitating the engagement of high-quality audit professionals and enhancing audit standards, the Finance Ministry had said in a notification.
Besides this, the gazette notification dated July 29 has also enhanced the threshold of 'substantial interest' from Rs 5 lakh to Rs 2 crore.
The threshold of 'substantial interest' has been amended after 1968.
Additionally, the ministry had said that the notification aligns director tenures in cooperative banks with the 97th Constitutional Amendment by increasing the maximum tenure from 8 years to 10 years, excluding the chairperson and whole-time director.