The Indian government has introduced a key amendment to bank nomination rules—one that’s especially important for NRIs managing assets back home. If you’ve got a bank account in India, this change can help ensure that your money goes to your loved ones without legal hassle or delay.
What Was the Old Rule?
Earlier, Indian banks allowed only one nominee per NRO/NRE savings account, fixed deposit, or recurring deposit. This created several issues:
• If the nominee passed away before the account holder, funds couldn’t be easily transferred.
• Legal delays occurred if no secondary nominee or will was in place.
• Unclaimed funds would be transferred to the DEAF (Depositor Education and Awareness Fund) after 10 years.
• It led to confusion and disputes among family members—especially common for NRIs with families spread across the globe.
What’s Changed Now?
The new amendment allows you to appoint up to 4 nominees for your bank account. You now have two clear options:
1. Joint Nomination
You can assign a specific percentage of your account to each nominee.
Example: 50% to your spouse, 30% to your son, 20% to your daughter.
2. Successive Nomination
The asset passes to the next nominee only if the previous one is not alive.
Example: If the wife is not alive, the account passes to the son, then to the daughter.
Why Is This Important for NRIs?
Many NRIs:
• Open accounts or hold fixed deposits in India.
• Appoint only one nominee (often a parent or spouse) and forget to update it.
• Face complications during inheritance, especially with family living in different countries.
This amendment:
• Prevents funds from getting stuck due to outdated nominations.
• Reduces dependency on legal documents or court orders.
• Helps in smooth succession planning and avoids family disputes.
Quick Comparison – Nominations across Financial Products
| Asset Type | Nominees Allowed |
| Mutual Funds | 3 |
| Demat | 3 |
| Insurance | 3 |
| Bank | 4 (new rule) |
This move brings consistency across products and makes inheritance simpler for your family.
Real-Life Example
Earlier scenario:
Mr. A, an NRI, had a savings account with 1 nominee—his son. But the son passed away before Mr. A. When Mr. A also passed away, the bank couldn’t release funds easily, causing stress and legal delays for the family.
Under new rules:
Mr. A can now nominate his wife, son, and daughter with either:
• A successive structure (funds go to wife, then son, then daughter); or
• A joint structure (e.g., 50% wife, 25% son, 25% daughter). If one nominee is no longer alive, their share is redistributed among others.
What Should NRIs Do Now?
1. Review and update your nominations across all Indian bank accounts.
2. Choose between joint or successive nomination as per your family situation.
3. Inform your nominees and keep a written record.
Pro tip: Also consider making a will, especially if you hold multiple assets in India.
