RBI instructs Banks to ensure Nominations for Accounts and Lockers

The Reserve Bank of India (RBI) has instructed Banks to ensure Nominations for Accounts and Lockers via issuing a Notification.

The RBI has discovered that nomination is unavailable in a large number of deposit accounts. In order to avoid inconvenience and undue hardship for the survivors/family members of deceased depositors, the RBI reiterates the need of obtaining nomination for all customers with deposit accounts, safe custody objects, and safety lockers.

In addition to directly contacting clients, banks should publicise the benefits of using the nomination facility through other media.

The Notification Read as Follows:

As you are aware, the nomination facility is intended to minimise the hardship and facilitate expeditious settlement of claims of the family members on the death of depositor/s. Instructions on nomination facility for Scheduled Commercial Banks (SCBs) (Excluding RRBs), Primary (Urban) Co-operative Banks (UCBs) and Deposit taking NBFCs have been incorporated in Master Circular on “Customer Service in Banks”1, Master Circular on “Customer Service – UCBs”2 and Master Direction on “Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016”3, respectively. The extant instructions also mandate banks to give wide publicity and provide guidance to deposit account holders on the benefits of the nomination facility.

However, the Reserve Bank’s regulatory examination shows that nomination is not available in a considerable percentage of deposit accounts. To avoid annoyance and undue hardship for the survivors/family members of deceased depositors, we underline the importance of obtaining nomination for all existing and new customers who have deposit accounts, safe custody objects, or safety lockers, as applicable.

The Customer Service Committee (CSC) of the Board/Board of Directors shall conduct a periodic review of nomination coverage. Starting March 31, 2025, the SEs will report progress in this respect on a quarterly basis using the Reserve Bank’s DAKSH portal. Furthermore, frontline workers at branches may be appropriately sensitised to obtain nominations as well as handle claims of deceased constituents and deal with nominees/legal heirs. The Account Opening Forms may be amended (if not already done) to allow consumers to avail or opt out of the nomination facility.

Apart from directly notifying the customers, SEs are advised to publicise the benefits of using the nomination facility through various media, including launching of periodical drives towards achieving a full coverage of all eligible customer accounts.