The Parliament of India has passed the Banking Laws (Amendment) Bill 2024, allowing bank account holders to nominate up to four people for their accounts and fixed deposits. This change aims to ease the transfer of funds to successors without legal issues.
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Depositors can choose between the same nominations, where shares are divided among nominees, or successive nominations, where inheritance follows a specific order. For lockers, only successful nominations will be allowed.
Introduced by Finance Minister Nirmala Sitharaman, the Bill was approved by voice vote in the Lok Sabha. Sitharaman emphasised that this move will empower depositors and simplify the transfer of funds.
Finance Minister Nirmala Sitharaman emphasised the government’s commitment to maintaining bank stability, saying, “The intention is to keep our banks safe, stable, and healthy, and the results are evident after 10 years”.
NOMINEES IN BANK ACCOUNTS
A nominee in a bank account is a person designated by the account holder to receive the account’s proceeds in case of the account holder’s death. Here’s an overview:
- Purpose of Nomination
- Ensures smooth transfer of funds to the nominee without legal complications.
- Avoids the need for a succession certificate or court approval.
- How to Nominate
- Account holders can nominate someone while opening the account or later by filling out a nomination form.
- Only one nominee can be assigned per account, but joint accounts can have one nominee collectively.
- Who Can Be a Nominee?
- Typically, family members like a spouse, children, or parents.
- However, the account holder can nominate anyone they trust.
- Rights of a Nominee
- A nominee is a trustee, not the legal heir. The nominee holds the money until it is distributed to the legal heirs unless they are the same person.
- Updating Nomination
- Account holders can change or cancel a nomination anytime by submitting a fresh nomination form to the bank.
- Legal Considerations
- Nomination simplifies the process but does not override a will or inheritance laws.
The bill also proposes extending the tenure of directors (excluding chairpersons and whole-time directors) in cooperative banks from 8 years to 10 years, aligning with the Constitution’s 97th Amendment. Additionally, it allows directors of Central Cooperative Banks to serve on State Cooperative Bank boards.
Other reforms include giving banks more flexibility in deciding statutory auditors’ remuneration and updating reporting schedules to the 15th and last day of each month, replacing the second and fourth Fridays. These changes aim to improve efficiency and compliance within the banking system.
