The nomination facility is intended to facilitate the expeditious settlement of claims by banks after the death of a customer and to avoid hardships that may befall their kin. Despite these advantages, if a customer chooses not to opt for nomination, it will be allowed, as per the new rules..
Nomination not mandatory
The RBI directions state that a bank is supposed to explicitly inform the customer of the availability of the nomination facility and offer them the option to utilise it.
The bank officials are also expected to explain the advantages of the nomination facility to a prospective customer, which include the simplification of the claim process in the event of an account holder’s death.
However, if the customer chooses not to avail the nomination facility, the bank will open the account without imposing any restrictions.
Meanwhile, the bank will ask the account holder to give a written declaration that they don’t require the nomination facility. Failing this, the bank will note that the customer refused to submit the written confirmation.
Under no circumstances will a prospective customer be denied or delayed in opening an account on the grounds of refusal to make a nomination.
Special cases
Additionally, if a nominee dies (in case of simultaneous nomination) prior to receiving the deposit from the bank, the nomination with respect to such nominee will become ineffective.
In such a scenario, the claims of that deposit (wherein nominee has died) will be settled in accordance with provisions applicable for accounts without a nominee.
The RBI directions also highlight that the bank is supposed to have in place appropriate systems and procedures to register in its books the registration, cancellation and variation of the nomination, as per the request of the customers.
Notably, the Government of India recently notified the Banking Laws (Amendment) Act, 2025, which will be effective from 1 November 2025 wherein bank account holders can nominate up to four simultaneous nominees. They can even specify the share or percentage of entitlement.
Under these notified rules, account holders can also opt for successive nominees under which the next nominee becomes operative only upon the death of the nominee placed higher.
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