Mudra Compass

In a welcome move aimed at offering more flexibility and clarity in estate planning, Indian banking regulations have undergone a key update: individuals can now appoint up to four nominees for their bank accounts, instead of just one. This development is part of a broader shift toward making personal finance more inclusive, accessible, and aligned with real-life needs.

For millions of account holders, this means better distribution of wealth, reduced family disputes, and clearer succession in the event of unforeseen circumstances. But the new rule is more than just an increase in number—it also comes with options for specifying each nominee’s share, making inheritance smoother and more transparent.

If you have a savings or deposit account, here’s everything you need to know about this change and how to use it to secure your family’s financial future.

What Has Changed?

Until recently, most bank accounts allowed for only one nominee per account. While simple, this limited option often led to confusion or conflict among legal heirs, especially in joint families or blended households.

Under the new rule, effective from May 2025, individuals can now:

• Nominate up to four people per bank account.
• Specify the percentage share each nominee is entitled to.
• Modify or cancel nominations at any time.

These provisions apply to savings accounts, fixed deposits, recurring deposits, and other eligible bank accounts held by individuals.

Why This Matters

The nomination facility is often misunderstood as a tool for transferring ownership. In legal terms, however, a nominee is a trustee—a caretaker of the money—until the rightful heir claims it. Despite this technicality, most banks hand over funds to nominees promptly, which makes the role practically significant.

With multiple nominees allowed, account holders can now:

• Avoid concentrating all funds with one person.
• Reflect complex family structures (e.g., second marriages, dependent siblings).
• Reduce the risk of disputes or litigation after death.

How to Appoint Multiple Nominees

Most banks now allow you to appoint multiple nominees through internet banking, mobile apps, or by visiting the branch. Here’s how it typically works:

1. Log into your bank account through the official app or website.
2. Navigate to the nomination section (usually under account settings).
3. Choose the account for which you want to update the nomination.
4. Enter the names, relationship, and share (%) of each nominee.
5. Authenticate using OTP or other security measures.
6. Save or submit the nomination request.

For those who prefer offline methods, nomination forms can still be submitted physically at the branch.

Example Scenario

Suppose you have ₹10 lakh in a fixed deposit and nominate four people—your spouse, two children, and your mother. You can allocate the amount as:

• Spouse: 40%
• Child A: 25%
• Child B: 25%
• Mother: 10%

If something happens to you, each nominee gets the amount in proportion. Without this facility, earlier you would have had to either:

• Open multiple FDs under different names, or
• Nominate just one person and expect them to divide the funds fairly.

What Happens If No Nominee Is Registered?

If a bank account has no nominee, the legal heirs must undergo a tedious claim process:

• Submit legal documents like a succession certificate or will.
• Get all heirs to sign an indemnity bond.
• Wait weeks or months for the bank to release funds.

This often causes emotional and financial stress, especially in the case of untimely death. Therefore, having updated nominations is not just advisable—it’s essential.

Key Points to Remember

• Minors as Nominees – You can nominate a minor, but a guardian’s name must also be provided.
• Joint Accounts: All account holders must agree on the nomination.
• Updating Nominations – You can modify or cancel nominations at any time by submitting a new request.
• Nomination ≠ Ownership – Nominees are not legal heirs. They hold funds until the rightful claimants assert ownership as per succession laws.
• Bank Communication – Always ensure your mobile number and email is up to date so you receive alerts regarding nomination updates.

Legal and Tax Implications

Even though nominees can claim funds quickly, the money technically belongs to the deceased’s estate. In cases of disagreement, courts may override the nomination in favour of a will or legal heir.

Also, inheritance tax is currently not applicable in India, but should such laws return in the future, proper nomination planning could reduce complications.

Conclusion

The ability to nominate up to four individuals per bank account is a thoughtful step towards empowering account holders and streamlining financial succession. In a country where family structures are evolving, and financial awareness is rising, such measures ensure that assets pass on with minimal stress or ambiguity.

Now is the perfect time to review your bank account nominations. Whether you’re single, married, or managing multi-generational wealth, the power to divide and designate your bank savings wisely is now in your hands. Don’t let inertia delay an important decision—log in, review, and update your nominations today.