The Lok Sabha recently passed the Banking Laws (Amendment) Bill 2024, introducing a significant change: bank account holders can now nominate up to four individuals for their accounts. This new rule provides greater flexibility, convenience, and protection for customers while reducing the issue of unclaimed deposits. Let’s explain what this means for you and how it could impact your finances.
What Does the New Rule Allow?
Before this bill, bank account holders could nominate only one individual per account. With the new amendment:
- You can nominate up to four individuals for your bank accounts, including fixed deposits.
- A separate nomination form is required for lockers and safe custody, and only successive nominations are permitted.
This change allows customers to better manage their financial legacies by ensuring that their savings reach the right individuals upon their death.
What Are Simultaneous and Successive Nominations?
The bill introduces two types of nominations:
- Simultaneous Nomination
- All nominees are eligible to receive the proceeds of the account at the same time.
- The account holder can specify how much percentage of the account holdings each nominee will receive.
- Successive Nomination
- Nominees receive the account proceeds one after the other, in the order specified by the account holder.
- The first nominee gets priority. If unavailable, the second nominee becomes eligible, and so on.
For locker accounts, only successive nominations are allowed.
Why Is This Important?
The new nomination rules aim to address two key issues:
- Flexibility for Account Holders
- Customers can now distribute their financial assets among multiple beneficiaries, ensuring fair allocation and reducing disputes.
- Reduction in Unclaimed Deposits
- With more nominees listed, there’s a higher chance of someone claiming the funds.
- As per RBI’s report, unclaimed deposits in banks rose by 26% in one year, from ₹62,225 crore in March 2023 to ₹78,213 crore in March 2024. The new rule aims to bring these funds back into circulation.
How to Add Nominees to Your Account?
To nominate individuals:
- Visit your bank branch or use internet banking to update your nominations.
- Specify the type of nomination (simultaneous or successive).
- Provide the required details, such as the nominee’s name, relationship, and allocation percentage (for simultaneous nominations).
For lockers, fill out a separate nomination form with the successive nomination option.
Benefits of Having Multiple Nominees
- Enhanced Security: Ensures your savings are distributed according to your wishes.
- Transparency: Reduces family disputes over financial inheritance.
- Convenience: Avoids complications in accessing funds after the account holder’s death.
- Awareness: Multiple nominees are more likely to know about the account, reducing the risk of funds going unclaimed.
How This Bill Enhances Banking Convenience
Union Finance Minister Nirmala Sitharaman emphasized that the Banking Laws (Amendment) Bill 2024 strengthens governance and improves customer convenience. By allowing up to four nominees:
- Customers gain greater control over their financial assets.
- Banks can better manage inheritance claims, ensuring smoother processes.
Key Points to Remember
- Simultaneous nomination allows all nominees to claim funds together in specified percentages.
- Successive nomination prioritizes nominees one at a time, based on the account holder’s order.
- For lockers and safe custody, only successive nominations are permitted.
- Update your nominations regularly to reflect your current preferences.
Conclusion
The Banking Laws (Amendment) Bill 2024 introduces a positive change for bank account holders, offering flexibility and reducing unclaimed deposits. By allowing up to four nominees and providing options for simultaneous and successive nominations, ensures better management of your financial legacy.
Take action today by reviewing and updating your bank account nominations to align with your goals and ensure your loved ones are protected.
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