New Banking Companies (Nomination) Rules, 2025 Introduce E-Nomination and Streamlined Procedures

The Central Government has issued the Banking Companies (Nomination) Rules, 2025, a significant piece of delegated legislation that came into force on November 1, 2025. These new rules, published in the Gazette of India, supersede the Banking Companies (Nomination) Rules, 1985, and the Co-operative Banks (Nomination) Rules, 1985, marking a modernization of nomination procedures within the banking sector. The issuance of these rules was undertaken in exercise of powers conferred by section 52, read with sections 45ZA, 45ZC, 45ZE, and 56 of the Banking Regulation Act, 1949, following consultation with the Reserve Bank of India. The primary objective is to update and consolidate the legal framework governing nominations for bank deposits, articles in safe custody, and safety lockers, reflecting contemporary banking practices and technological advancements.

Under the new framework, depositors are now permitted to make nominations in respect of deposits held by a banking company in favour of one or more individuals, not exceeding four, either successively or simultaneously. A key introduction is the provision for electronic or digital mode ("e-nomination"), which banking companies may offer, provided they meet specific conditions. These conditions include enabling the nomination of up to four individuals, obtaining all necessary details, ensuring authentication and validation of depositor credentials, and implementing a system for alerting depositors about nominations made. The rules specify authentication methods, including physical signatures, electronic authentication techniques reliable under the Information Technology Act, 2000, and internet or mobile banking applications. For physical or electronic authentication, a single-factor validation is deemed sufficient, while internet or mobile banking applications mandate a minimum two-factor authentication. The legislation provided: “The nomination by the depositor, or as the case may be, all the depositors together, in respect of a deposit held by a banking company to the credit of one or more individuals, may be made in favour of one or more individuals, but not exceeding four, either successively or simultaneously.” Nominations are restricted to deposits held in an individual capacity, excluding those held in a representative capacity. Special provisions address minor nominees, allowing the appointment of another non-minor individual to receive the deposit amount during the nominee's minority. For deposits in a minor's name, the nomination must be made by an individual lawfully entitled to act on behalf of the minor. The rules also detail procedures for the variation or cancellation of existing nominations, stipulating that subsequent nominations will cancel previous ones and that for joint accounts, all depositors must concur for cancellation or variation. Banking companies are obligated to acknowledge nominations, cancellations, or variations in writing or electronically and to register them in their books. The validity of a nomination is not affected by the renewal of the deposit. Furthermore, depositors can request to extend a nomination to other accounts within the same banking company, which, upon acceptance, will be treated as separate nominations for each account. The provisions concerning nominations for deposits apply mutatis mutandis to articles left in safe custody and safety lockers, ensuring a uniform approach across various banking services.

The legislative intent behind the Banking Companies (Nomination) Rules, 2025, is to enhance depositor convenience and streamline the process of transmitting assets upon the death of a depositor. The earlier legal position, governed by the 1985 rules, did not adequately address the advent of digital banking or the complexities arising from multiple nominees. These new rules address statutory gaps by formally recognizing e-nomination, thereby aligning banking practices with the digital age and reducing the need for physical paperwork. They also provide clarity on how multiple nominees can be designated, whether successively or simultaneously, and establish clear authentication protocols for digital nominations, thereby strengthening security and legal certainty. The supersession of the 1985 rules indicates a comprehensive overhaul rather than mere amendments, introducing new rights for depositors to manage their nominations more flexibly and imposing new obligations on banking companies to facilitate these modern processes. The rules aim to prevent disputes and simplify the claim settlement process for nominees by ensuring that nominations are clearly recorded, acknowledged, and easily updated. The detailed form annexed to the rules further standardizes the information required for nominations, cancellations, and variations, promoting consistency across the banking sector.

Keywords: Banking Companies (Nomination) Rules, 2025, e-nomination, bank deposits, safe custody, safety lockers, Banking Regulation Act, 1949, Reserve Bank of India, financial services, India, nomination procedures

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