New nomination rule: Is it mandatory to name a nominee for your deposit account?

Banks will now have to expressly advise customers about the nomination facility when opening a deposit account. According to the new laws, when opening an account, banks must explicitly explain the purpose and benefits of the nomination service. This includes emphasising how having a nominee streamlines the claim process in the terrible case of the accountholder's death, and how it allows for the smooth transfer of cash to the nominee without legal delays.

As per the RBI’s latest directions, notified under the Banking Laws (Amendment) Act, 2025, it is mandatory for banks to offer customers the choice to nominate or opt out, without any impact on their eligibility to open an account.
If a customer chooses not to register a nominee, banks should obtain a written declaration confirming the decision. In cases where the customer refuses to sign such a declaration, banks are asked to note the fact of refusal in their internal records, as per the latest RBI rules.
However, under no circumstances can a customer be denied or delayed in opening an account solely on the ground of refusal to make a nomination, provided all other requirements for account opening are satisfactorily met.

The new guidelines also address cases involving multiple nominations. If one of the nominees passes away before receiving the deposit, that particular nomination becomes invalid. Banks will then settle such claims as per the RBI’s Settlement of Claims Directions, 2025, which cover cases where no valid nomination exists.
A bank cannot claim a valid discharge under the provisions of the Act if payments are made to individuals based on nomination made under any other law for specified purposes.

Banks are also directed to record the status of nomination registration directly on passbooks, account statements, and term deposit receipts with the legend “Nomination Registered.” The name of the nominee(s) must also be printed in these documents for clarity.

Banks must set up appropriate procedures for recording, registering, cancelling, or changing nominations in order to guarantee procedural transparency. Following receipt of the forms, consumers must get acknowledgements for all nomination-related requests, including registration, cancellation, and variation, within three working days. If a nomination request does not comply with the prescribed legal provisions, the bank must inform the customer in writing, clearly stating the reasons for rejection within the same three-day window.