Nomination under Section 45ZA BR Act: Four Nominees and Deceased Claims

Two quiet problems sit at the end of every deposit: the depositor may die, and the depositor may simply stop coming. The first sets the bank between a grieving family and the law of succession, which the nomination provisions were written to manage. The second leaves money that belongs to someone who has forgotten it, which the law now sweeps into a central fund without ever extinguishing the owner's claim. Both subjects were reshaped recently: nomination by the Banking Laws (Amendment) Act, 2025, the settlement of deceased customers' claims by the Reserve Bank's Directions of 26 September 2025, and dormant accounts by its consolidated instructions of 2024, so the current positions matter.

1. Nomination: the scheme of Sections 45ZA to 45ZF

Nomination entered the Banking Regulation Act, 1949 in 1985, as Part IIIB sections 45ZA to 45ZF, to solve a practical problem: on a depositor's death the bank could not safely pay anyone without a representation of the estate, and small families waited months for certificates to collect their own money. The design gives the bank a person to pay and a complete discharge for paying, while leaving the law of succession untouched behind the payment.

Figure 1: The three facilities and the one discharge

The Banking Laws (Amendment) Act, 2025, which received assent on 15 April 2025, rewrote the nomination sections with effect from 1 November 2025.

• A depositor may now nominate up to four persons for a deposit, and may do so simultaneously, giving each nominee a stated percentage with the shares together making the whole, or successively, so that a nominee is entitled only if those named before him have died.
• For articles in safe custody and for lockers, up to four nominees may be named but only successively, since an article or a locker's contents cannot sensibly be split by percentage at the counter.
• Nomination is available where the deposit is held by one individual or by individuals jointly, is made, varied or cancelled in the prescribed form, and a fresh nomination displaces the earlier one. Where the nominee is a minor, the depositor may appoint a person to receive on the minor's behalf during minority.
• The procedure and forms follow from the Banking Companies (Nomination) Rules framed under the amended sections.

What the nominee actually gets

2. The deceased depositor: how the claim is settled

Figure 2: The order in which a bank looks on a depositor's death

1. Survivorship first. In an account held as either or survivor, former or survivor or their variants, the survivor is entitled by the contract itself, and the bank pays the survivor without asking about heirs. The heirs' remedy, if the money belonged beneficially to the deceased, lies against the survivor.
2. Nomination second. Where there is no surviving joint holder and a nomination is in force, payment to the nominee on proof of death and identity is a full discharge under Section 45ZB. The bank neither asks for a succession certificate nor adjudicates between the nominee and the heirs.
3. Simplified settlement third. Where there is neither survivor nor nominee, the Reserve Bank of India (Settlement of Claims in respect of Deceased Customers of Banks) Directions, 2025, issued on 26 September 2025 and to be implemented by 31 March 2026, require banks to settle claims up to ₹15 lakh, or ₹5 lakh in a cooperative bank, on a simplified set of documents: the claim form, the death certificate, identity proof, and a legal heir certificate or an affidavit with an indemnity and the no objection of the other heirs, without a succession certificate, probate or letters of administration. A bank may fix a higher limit. A deposit claim must be settled within 15 calendar days of receiving the complete documents, and delay attributable to the bank carries interest of at least the Bank Rate plus 4 per cent a year for the period of delay.
4. Representation last. Beyond the limit, or where the heirs dispute among themselves, the bank is entitled to insist on a succession certificate under the Indian Succession Act, 1925, on probate or letters of administration, or on a court order, because payment against a disputed title protects nobody.

• Premature withdrawal of a term deposit by survivors or nominee is allowed without penalty where the contract provides, and banks must permit it by policy.
• Pipeline flows arriving after death, such as pension or dividends, are returned or held for the estate, and the account is ordinarily closed into a claim rather than operated.
• Access to a locker on death follows Section 45ZE and the locker agreement: the nominee, or the survivor under a joint hiring, is given access and liberty to remove contents, after an inventory, without the bank adjudicating ownership of what is inside. Under the Directions of 2025 the bank must process the claim and fix the inventory date within 15 calendar days of complete documents, and pays ₹5,000 for each day of delay attributable to it.

3. Inoperative accounts and unclaimed deposits

The Reserve Bank consolidated this subject in its instructions of 1 January 2024, effective 1 April 2024, replacing a score of circulars.

Figure 3: The journey of a forgotten balance

• A savings or current account becomes inoperative after two years without a customer induced transaction. Bank induced entries, interest credits and charges, do not count; a customer's own financial transaction, a two factor authenticated enquiry, a standing instruction or a know your customer update all do.
• Banks must review annually accounts with no customer activity for a year and tell the holder, in writing or electronically, before the account turns inoperative.
• No charge may be levied for non-maintenance of minimum balance in an inoperative account, none for activation, and interest on savings continues regardless. Activation needs a know your customer update, including by video, processed within 3 working days, with a fresh alert to the customer so that a fraudulent revival is visible.
• A balance unclaimed for 10 years becomes an unclaimed deposit and is transferred, under Section 26A of the Banking Regulation Act, 1949, to the Depositor Education and Awareness Fund maintained by the Reserve Bank, along with interest accrued. Term deposits run the 10 years from expiry of the term.
• Each transferred amount carries a unique reference number, the bank lists the holder's name and address on its website with a search facility, contacts holders and nominees periodically, and the central UDGAM portal, opened in 2023, lets a person search many banks at once.
• The transfer never extinguishes the claim. The depositor, or the nominee or heirs, claim from the bank at any time; the bank pays, with interest at the rate the Fund scheme specifies for interest bearing accounts, and is refunded by the Fund. The Fund's income is applied, as the name says, to depositor education and awareness.

4. Quick Revision

1. Nomination is machinery of payment, never a will.
2. A joint account's survivorship clause operates before nomination is ever reached.
3. Simplified settlement without a succession certificate is a Reserve Bank requirement, not a favour, up to ₹15 lakh or the bank's higher limit.
4. An inoperative account keeps earning savings interest and costs nothing to revive.
5. Transfer to the Fund changes who holds the money, not who owns it.

5. Frequently Asked Questions

My father named my mother as nominee. Do his other heirs get nothing?

They keep their full shares. Payment to your mother discharges the bank, under Section 45ZB, and nothing more. Ram Chander Talwar holds that the nominee receives the money for the benefit of those entitled under the law of succession, so your mother holds it subject to the heirs' claims, and the statute itself preserves those claims against her. If your father wanted the money to belong to her absolutely, the instrument for that is a will; where there is none, the personal law of succession distributes it, whoever collected it at the counter.

What does simultaneous nomination change in practice?

It removes the single point of failure. Before 1 November 2025 a deposit carried one nominee, so the death of the nominee before the depositor, a common event between spouses of similar age, left the family back at succession certificates. A depositor may now name up to four, either simultaneously, with each taking a stated percentage so the family collects in defined shares, or successively, so that the second steps in only if the first has died. For lockers and safe custody only the successive form exists, because articles cannot be paid out in percentages; the first surviving nominee in the order takes access to the whole.

The bank is asking for a succession certificate for a small balance. Can it insist?

Not within the simplified settlement limit. The Reserve Bank's Directions of 26 September 2025 require banks to settle the claims of deceased customers without a succession certificate, probate or letters of administration up to ₹15 lakh, or ₹5 lakh in a cooperative bank, or any higher limit the bank adopts, against the death certificate, identification, and a legal heir certificate or an affidavit with an indemnity and the other heirs' no objection, within 15 calendar days of complete papers, with interest at the Bank Rate plus 4 per cent for any delay the bank causes. A refusal inside the limit is a deficiency in service for the Ombudsman. Beyond the limit, or where the heirs themselves dispute, the bank is entitled to insist, because an indemnity from one faction is no protection against the other.

Is money transferred to the Fund lost after some final date?

No, there is no final date. Transfer under Section 26A moves the custody of the balance to the Depositor Education and Awareness Fund; the depositor's ownership survives indefinitely, and the claim is made at the bank, which pays with the interest the scheme provides for interest bearing deposits and recovers the amount from the Fund. The practical difficulty is discovery rather than entitlement, which is what the website listings with unique reference numbers, the periodic outreach to holders and nominees, and the central UDGAM search portal exist to solve.

Does nomination cover a locker held jointly?

Nomination under Section 45ZE is made by a sole hirer; where a locker is hired jointly, the section lets the hirers provide that on the death of one, access goes to the survivor jointly with the nominee of the deceased, so the two regimes mesh rather than collide. In every case the bank's role on death is the same narrow one: verify the death and the identity, prepare an inventory of the contents in the presence of those entitled, and give access and liberty to remove, without deciding who owns what was inside. Ownership of the contents is a question of succession, exactly as it is for the deposit, and the inventory exists so that the later dispute, if one comes, is about known articles rather than remembered ones. Where the locker was hired before the amendment of 2025, a single nomination already made continues to operate until it is varied, and a hirer who wants the four person successive form simply files a fresh nomination in the prescribed form, which displaces the earlier one. The articles in safe custody follow the identical pattern under Section 45ZC, with the bank returning the articles to the nominee against an inventory and acknowledgment, and the discharge in Section 45ZD leaving every question of ownership to the law of succession.

Do the four nominees rule and the new claim rules apply to old accounts?

Yes. The Banking Laws (Amendment) Act, 2025 amended the nomination sections of the Banking Regulation Act themselves, so from 1 November 2025 a depositor may register up to four nominees on an existing account as well as a new one; nominations already registered continue until varied or cancelled. The Reserve Bank's directions on settlement of deceased customers' claims likewise apply to claims made after their effective date whatever the age of the account, so the simplified thresholds, the 15 day timeline and the compensation for delay govern old savings accounts, term deposits and lockers alike. The practical effect is that the four nominee facility, the simplified claim thresholds and the compensation for delay are the operative law for every account, old or new, with single nominee registrations made earlier continuing by force of the savings provision until the depositor changes them.

6. Related Topics and Provisions

• Special types of customer, joint accounts and survivorship
• Deposit accounts and Know Your Customer requirements
• Deposit insurance and the Deposit Insurance and Credit Guarantee Corporation
• The duties of a banker and the operation of lockers
• Garnishee orders, attachment and the termination of the relationship