BTL 954 - Bank Deposits – Nomination – Clarifications

 

The Banking Tutor’s Lessons

BTL 954                                                                                30-10-2026

Bank Deposits – Nomination – Clarifications

Vide The Banking Laws (Amendment) Act, 2024, Nomination rules related to Bank Deposits, Lockers etc. are revised.

Prior to the above Amendment Act, in case of Deposits, only one Nomination is allowed. The above referred Amendment allows the following :

a) The Amendment Act allows the appointment of up to four nominees.  The nomination shall not be made in favour of more than four persons;

b) For deposits, such nominees can be appointed either successively or simultaneously while for other purposes they can be appointed successively.

Simultaneous Nomination

In case of simultaneous nominees, the nomination will be effective in a declared proportion.

The nomination shall be made in respect of the whole amount of deposit.

If any nominee dies before receiving deposit from the banking company, the nomination in respect of such nominee alone shall become ineffective and the amount of deposit purported to be nominated in favour of deceased nominee shall be treated as if nomination had not been made in respect of that portion of deposit.

Successive Nomination

For successive nomination, the nominee who has been named higher in the order of nomination will receive priority.

 

Nomination of the first nominee shall be effective if that nominee survives the person or persons who made the nomination.

For better clarity I am furnishing examples.

Simultaneous Nomination

Example 1 - Mr X, the depositor nominated A,B and C without mentioning any shares. In such case, the claim proceeds will be shared to A,B and C equally.

 

Example 2 – Mr X, the depositor nominated A,B and C duly mentioning shares 40% ; 35% and 25% respectively. If the claim amount is Rs 10 lacs, A will get will get Rs 4 lacs, B will get Rs 3.50 lacs and C will get Rs 2.5 lacs.

 

Example 3 – Mr X, the depositor nominated A,B and C duly mentioning shares 40% ; 35% and 25% respectively.  However, before the death of X, B expired and X had not altered nomination. On the death of X, Bank has to settled the claim as under.

Surviving Nominees' Share: The two surviving nominees, A and C  receive their respective equal portions (40% and 25% respectively) making 35% of the total amount ) upon submitting the required documents.

Deceased Nominee's Share: Because a nominee acts as a trustee rather than the absolute owner of the funds, the 35% share of the nominee belongs to the estate of the deceased depositor and is claimed by/settled with the legal heirs of the original depositor.

 

Example 4 - Mr X, the depositor nominated A,B and C duly mentioning shares 40% ; 35% and 25% respectively.  However, after the death of X, B expired before making any claim. In this case, claim will be settled as under.

The deposit claim will be split into two separate settlement tracks:

1.    For Surviving Nominees (A and C):

o   Nominee A will be paid 40% of the total deposit proceeds.

o   Nominee C will be paid 25% of the total deposit proceeds.

2.    For the Deceased Nominee (B):

o   Because Nominee B passed away after the depositor but before receiving the funds, the nomination for B's 35% share becomes ineffective.

o   This specific 35% portion does not shift or roll over to A and C. Instead, it is legally treated as if no nomination was made for this part of the money.

o   Process: The bank will settle this 35% share through its standard "Deceased Claim without Nomination" framework. The funds will be distributed to the legal heirs of the original depositor (Mr. X)—not the heirs of Nominee B—upon submission of a legal heir certificate, indemnity bond, or succession certificate depending on the bank's threshold limits.

 

Successive Nomination

Nomination of any nominee lower in the order of nomination shall become effective only after the death of all the nominees whose names are higher in the order of nomination.

Example 5 - Mr X, the depositor nominated A as First Nominee, B as Second Nominee and C as the third nominee. On the death of X, only A can make a claim. B will get right to claim only if A dies. Similarly, C will get right only A and B expire.

Example 6 - Mr X, the depositor nominated A, B and C as nominees. However, Order of Nominees not mentioned. Where the order of nomination is not mentioned, persons shall be deemed to have been nominated in the order in which their names appear in the nomination.

 

Example 7 - Mr X, the depositor nominated A,B and C duly mentioning shares 40% ; 35% and 25% respectively.  On the death of X, A and C approached the Bank for settlement of claim. Whereabouts of B are not known. In such case Bank can settle Rs 4 lacs to A, Rs 2.5 lacs to C.

The remaining 35% of the deposit amount will be held by the bank in a separate account or under the same deposit until B comes forward to claim it, or until a legal heir presents a valid legal representation (like a succession certificate) for B's share if B is legally presumed dead. As  B's whereabouts are unknown, the remaining 35% will eventually be dealt with in one of two ways based on Indian law:

1.    If the amount is below the bank's threshold limit (typically up to ₹1 Lakh): The legal heirs of B can approach the bank with a copy of a police First Information Report (FIR) and a formal "Non-Traceable Report" alongside a Letter of Indemnity to claim the funds without waiting years.

2.    If the amount is large or remains unclaimed: The claimants must file for a declaration of civil death in a competent court under Sections 110 and 111 of the Bharatiya Sakshya Adhiniyam, 2023. Once the court presumes B is legally deceased (usually after a 7-year missing period), the bank will release B's 35% share to B's legal heirs.

Sekhar Pariti

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