What proposed banking law amendments mean for you
Subscribe to enjoy similar stories. MUMBAI : The Banking Laws (Amendment) Bill, 2024, which allows bank account holders to have up to four nominees, marks a significant shift in how money invested in banking products can be managed and distributed after the account holder's demise. The bill, passed by the Lok Sabha on 3 December, says that nominees are only custodians and safekeepers representing the beneficiaries (if there is a testamentary document, e.g., Will/Trust deed) and heirs (in the absence of a testamentary document).
They are not owners. However, nomination is important as it aids the process of inheritance. Rajat Dutta, founder of Inheritance Needs, said this change is aimed at providing opportunities to family members of the deceased to ensure ease in the claim process and thereby reduce unclaimed amounts lying with banks.
Mint examines how the new bill compares to previous regulations and its benefits. The existing rules allow savings bank account and fixed deposit holders to register only one nominee. However, people could have two nominees in the case of a jointly held vault (locker).
The amendment addresses the issue of such unclaimed funds in the Indian banking system. “Managing unclaimed money is a burden on the financial system. The amendment will curb the asset flow to the DEAF and ensure they reach the family of the deceased (heirs or beneficiaries)," Dutta said.
For example, earlier Mr A could register only one nominee for his savings account, fixed deposits or recurring deposits. If he nominated his spouse as the sole nominee, she would receive the funds upon his demise. However, if his spouse predeceased him, the nomination would become invalid.
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