The Government of India has updated rules for naming beneficiaries in bank accounts and related services through the Banking Laws (Amendment) Act, 2025. These changes take effect on November 1, 2025, and involve Sections 10, 11, 12, and 13 of the Act. They amend specific parts of the Banking Regulation Act, 1949, including Sections 45ZA, 45ZC, 45ZE, and a new Section 45ZG. The updates were announced in Gazette Notification S.O. 4789(E) on October 22, 2025. The goal is to make it easier for customers to manage their assets and for banks to handle claims after a depositor’s passing, covering deposit accounts, items held in safe custody, and safety lockers.
Purpose of the Changes
These amendments allow depositors to name up to four individuals as beneficiaries, either to share assets at the same time or in a sequence. This approach helps distribute assets more smoothly and reduces the chance of disagreements. Beneficiaries receive access to the assets as holders in trust, but the final ownership follows legal rules for inheritance, or any will in place. The rules apply to all banks, aiming to protect depositors and improve how banks operate.
Key Amendments
i) Naming Multiple Beneficiaries:
Depositors can select up to four people to receive their assets. This can be done by dividing shares among them immediately or by setting a order of priority. This is an improvement over the earlier rule, which allowed only one beneficiary.
ii) Sharing Among Beneficiaries at the Same Time
This method applies only to deposit accounts. It includes:
a) Naming up to four beneficiaries and assigning each a percentage of the total.
b) Ensuring the percentages add up to 100% and cover the full amount in the account.
c) If a beneficiary passes away before claiming their share, that portion follows the usual inheritance process without a named recipient.
d) Any errors, such as unclear shares or incomplete coverage, may make the arrangement invalid.
iii) Beneficiaries in Sequence
This applies to deposit accounts, items in safe custody, and safety lockers. Beneficiaries are listed in order:
a) The next person in line becomes eligible only after the previous one has passed away.
b) If no order is specified, the sequence follows the order of names on the form.
c) This creates a clear path for transfer, helping to prevent conflicts.
iv) Rules for Safe Custody Items and Safety Lockers
For these services, only the sequential method is allowed, with up to four beneficiaries. Sharing at the same time is not permitted, to maintain an orderly process and avoid issues with access. The following table compares the two methods:
| Feature | Sharing at the Same Time | Sequence of Beneficiaries |
| Number of Beneficiaries | Up to 4 | Up to 4 |
| Applies To | Deposit accounts only | Deposit accounts, safe custody items, and safety lockers |
| How Assets Are Divided | By percentages (must total 100% and cover all) | By priority order; next in line only after prior passes away |
| Additional Notes | Share of a deceased beneficiary goes without naming; invalid if incomplete | Order defaults to name sequence if not stated; promotes clear transfer |
Requirements for Compliance and Records
Banks must follow set procedures for adding, changing, or removing beneficiaries, as detailed in the upcoming Banking Companies (Nomination) Rules, 2025. Beneficiaries need to provide proof of identity and a death certificate when making a claim. Auditors will check these records to ensure everything is correct and follows the rules.
What This Means in Practice
Depositors should check their current beneficiary arrangements and update them to match their wishes, perhaps with advice from a legal expert to fit with overall plans for assets. Banks need to train employees on the new steps, prepare their systems and online tools by the start date, and inform customers clearly. Those who may inherit assets should know that beneficiary naming speeds up access but does not change legal ownership, so full planning for inheritance remains important.
These updates mark an important advancement in banking rules, building greater confidence and effectiveness in the system.