The Reserve Bank of India (RBI) has issued Circular No. DOS.CO.PPG/SEC.13/11.01.005/2024-25, dated January 17, 2025, reiterating the importance of ensuring nomination for deposit accounts, safe custody articles, and safety lockers. This initiative aims to minimize hardships faced by the legal heirs of deceased account holders and facilitate seamless claim settlements.
Significance of the Nomination Facility
Nomination enables account holders to designate an individual who will receive their funds, locker contents, or safe custody articles upon their demise. This mechanism significantly reduces the legal and procedural hurdles that families often encounter while claiming funds. However, despite its advantages, a large number of accounts remain without a nominee, contributing to ₹42,270 crore in unclaimed deposits as of March 2023.
Key RBI Directives
To address this concern, RBI has mandated the following measures:
1. Mandatory Nomination for All Eligible Accounts
- Banks must obtain nominations for all new and existing deposit accounts, safety lockers, and safe custody articles.
- Customers must be encouraged to add a nominee or explicitly opt out by signing a declaration.
2. Periodic Review by Customer Service Committee (CSC)
- The Customer Service Committee (CSC) of the Board must periodically assess the coverage of nomination.
- Banks must report progress to RBI’s DAKSH portal every quarter, starting from March 31, 2025.
3. Training and Sensitization of Frontline Staff
- Bank staff should be trained to proactively obtain nominations and handle claims efficiently.
- Special attention should be given to guiding nominees and legal heirs through the claim process.
4. Revision of Account Opening Forms
- Forms must include an option for customers to either avail of the nomination facility or formally opt out.
5. Awareness and Outreach Programs
- Banks must actively promote the benefits of the nomination facility through media campaigns and customer outreach programs.
Challenges Leading to Unclaimed Deposits
Several factors contribute to the accumulation of unclaimed deposits, including:
| Challenge | Impact |
|---|---|
| Lack of Nomination | Families must undergo lengthy legal procedures to access funds. |
| Neglect of Inactive Accounts | Customers often forget to close or update old accounts. |
| Pandemic Impact | Many deceased account holders had no nominees, leading to an increase in unclaimed funds. |
| Low Awareness | Senior citizens and rural customers are often unaware of the nomination facility. |
Impact of Missing Nominations – Real-Life Cases
- A widow in Chennai struggled to access her late husband’s bank account for months, delaying essential medical expenses.
- A family in Mumbai spent over six months in legal proceedings to claim funds from a deceased relative’s account due to the absence of a nominee.
- An elderly man in rural Uttar Pradesh was unaware of the nomination facility, causing unnecessary delays for his heirs.
Expected Benefits of Comprehensive Nomination Coverage
✔ Faster and Hassle-Free Claim Settlements – Legal heirs can access funds without excessive documentation.
✔ Reduction in Unclaimed Deposits – Funds remain in circulation rather than being held as unclaimed deposits.
✔ Improved Customer Service – Streamlined processes will enhance customer satisfaction and operational efficiency.
Conclusion
The nomination facility is a crucial safeguard that simplifies claim settlements and protects families from unnecessary financial and legal burdens. RBI’s latest directive reinforces the need for banks to ensure comprehensive nomination coverage across all eligible accounts. By implementing these measures effectively, financial institutions can enhance customer trust, reduce unclaimed deposits, and improve overall service standards.
