How the proposed banking law amendments would affect you

New rules are aimed at easing claim process for the bereaved family and reduce unclaimed funds in the system

- Anil Poste

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 by an individual can be managed and distributed after the person's demise.

The bill, passed by the Lok Sabha on 3 December, says nominees are only custodians and safekeepers representing the beneficiaries (if there is a testamentary document like Will/Trust deed) and heirs (in the absence of a testamentary document). They are not owners. But 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.

Mint compares the new bill to previous regulations and its benefits.

Existing regulations

The existing rules allow savings 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 unclaimed funds in the 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.