When Meena’s father died, his savings account and two fixed deposits went to her within a couple of weeks. His mutual fund folio took months, because he had never filled in a nominee and the fund house asked for proof that she and her brother were the only legal heirs. The difference came down to one form. Nomination is the simplest piece of paperwork in personal finance, and skipping it is one of the most expensive mistakes a family can make.
This guide explains how nomination works for bank deposits, lockers, demat accounts and mutual funds, how many nominees you can name under the current rules, what a nominee actually receives, and why a nominee is not the same as an heir. It also covers why you still need a will even after every account shows a nominee.
What nomination does, and what it does not do
A nominee is the person a bank, depository or fund house will pay or transfer your money to after your death. The point is speed. The institution gets a clear instruction, it pays the named person, and it is legally discharged. Your family does not need a court document just to get the money released.
What a nominee does not get is automatic ownership. The Reserve Bank of India’s directions on claims say that a nominee receives the money as a trustee of the legal heirs of the deceased. The bank must tell the nominee this in writing. Payment to the nominee does not wipe out the claims that other heirs may have against the nominee for that money.
Think of nomination as the door through which money leaves the institution, and your will or the succession law as the rule that decides who finally keeps it. Trouble starts when the two point to different people.
Nomination for bank accounts: the four-nominee rule
The biggest change in recent years came from the Banking Laws (Amendment) Act, 2025. The Finance Ministry announced that its nomination provisions came into force on 1 November 2025, and the RBI issued fresh directions on nomination from the same date. The key features are:
- You can name up to four nominees for a deposit account.
- For deposit accounts you can choose simultaneous or successive nomination.
- For lockers and articles kept in safe custody, only successive nomination is allowed.
- Under simultaneous nomination you set a share for each nominee, and the shares must add up to 100%.
- Under successive nomination, the next nominee becomes operative only if the one placed above has died.
Simultaneous or successive: which suits you
Say you have ₹10 lakh in fixed deposits and two adult children. With simultaneous nomination at 50% each, each child gets ₹5 lakh directly. With successive nomination you might name your spouse first and the two children after that, so the whole amount goes to your spouse, and the children come in only if your spouse is no longer alive.
One detail matters for simultaneous nomination. If a nominee dies before the bank pays out, the RBI’s directions say the nomination for that person alone becomes ineffective, and the bank settles that share under the rules for accounts without a nominee. The other nominees still get their shares. If you use simultaneous nomination, review it whenever there is a death or a birth in the family.
What your bank must do
The RBI directions also put duties on banks. A bank must explain the nomination facility when you open an account. If you decline, it can ask for a written declaration, but it cannot refuse or delay your account only because you did not nominate. It must acknowledge a nomination, cancellation or change within three working days, and print “Nomination Registered” with the nominee’s name on the passbook or statement and on fixed deposit receipts. If your passbook does not show this, ask the branch.
Demat accounts and mutual funds: the SEBI rules
Shares in a demat account and units in a mutual fund folio follow rules set by SEBI, not the RBI. SEBI issued a circular on 29 May 2026 modifying its nomination norms, effective from 1 September 2026. It replaces the earlier set of SEBI circulars on the subject. Under the current rules:
- You can name up to three nominees for a demat account or a mutual fund folio.
- For a single-holder account or folio, you must either give a nomination or submit an opt-out declaration.
- Nomination is optional for jointly held accounts, but all joint holders must consent to add or change a nominee.
- If you do not fix a percentage for each nominee, the holdings are split equally, and any odd lot left after division goes to the first nominee.
- You can add, change or cancel a nominee any number of times, and the depository participant or fund registrar must acknowledge each change.
Only the nominee’s name and relationship are mandatory, plus date of birth if the nominee is a minor. Contact details, an identity document and percentage shares are optional, though giving a phone number and email lets the registrar reach your nominee later. Online, the form is validated by e-sign, a digital signature or two-factor authentication with an OTP. On paper, your signature needs no witness, but a thumb impression must be witnessed by two people.
After the investor dies, multiple nominees can either continue in the same account or folio or open separate accounts for their share. SEBI’s opt-out form itself warns that without a nominee, heirs may need extra legal or court documents, and that holdings left unclaimed for long may be moved to the Investor Education and Protection Fund.
Bank, locker, demat and fund rules side by side
| Holding | Maximum nominees | Type allowed | Rule source |
|---|---|---|---|
| Savings, current and fixed deposits | 4 | Simultaneous or successive | Banking Laws (Amendment) Act, 2025 and RBI directions |
| Bank locker and safe custody articles | 4 | Successive only | Banking Laws (Amendment) Act, 2025 and RBI directions |
| Demat account | 3 | Shares by percentage, equal if not stated | SEBI circular of 29 May 2026 |
| Mutual fund folio | 3 | Shares by percentage, equal if not stated | SEBI circular of 29 May 2026 |
Government small savings schemes such as PPF and the Senior Citizens’ Savings Scheme are run by banks and post offices, but the RBI’s claim directions do not apply to them. Claims there follow each scheme’s own rules, so check the nomination on those accounts separately.
Nominee vs legal heir: who finally keeps the money
A legal heir is someone entitled to your estate under your will or, if there is no will, under the succession law that applies to you. A nominee is just the person the institution has been told to pay. They can be the same person. Often they are not.
Take Ravi, a widower with three children. His savings account names his eldest son as nominee because the son lives in the same city. Ravi leaves no will. On his death the bank pays the whole balance to the eldest son, as it should. But under the succession law, all three children may be heirs with equal shares. The eldest son holds the money as a trustee for all of them, and his siblings can ask for their share.
In practice this is why many families either name all the intended heirs as simultaneous nominees, or make sure the will says the same thing as the nomination. Mismatches are what lead to family disputes and, sometimes, court cases.
How nomination claims are settled after a death
The RBI’s Settlement of Claims in respect of Deceased Customers of Banks Directions, 2025 standardised the process across commercial and co-operative banks, with implementation required by 31 March 2026.
When there is a nominee
The bank asks for three things: a claim form signed by the nominee, the death certificate, and an officially valid document proving the nominee’s identity and address. It cannot insist on a succession certificate, probate or an indemnity bond, whatever the amount in the account. In a joint account, the nominee’s right arises only after all the joint holders have died; until then the survivors deal with the account.
Time limits and compensation
A bank must settle a deposit claim within 15 calendar days of receiving all the required documents. If it delays for reasons on its side, it must pay interest of at least the Bank Rate plus 4% a year on the amount for the period of delay. For a locker, the bank must process the claim and fix a date for the inventory within 15 calendar days, failing which it pays ₹5,000 for each day of delay.
When there is no nominee
Without a nominee or survivorship clause, the process is slower. If there is no will and no dispute, a simplified procedure applies for claims below a threshold of ₹15 lakh at commercial banks and ₹5 lakh at co-operative banks. Heirs then submit a claim form, death certificate, identity proof, an indemnity bond, no-objection letters from other heirs and either a legal heir certificate or a declaration from an independent person who knows the family. Above the threshold, banks can ask for a succession certificate or a legal heir certificate or affidavit, and may seek a surety.
Why a will is still needed after nomination
Nomination solves the problem of getting money out of an institution. It does not decide the final ownership of your assets, and it does not cover property that has no nomination system at all, such as a house, jewellery at home or a car. A will does both.
A will also helps where you want something other than equal shares, where a nominee has died before you, or where you want to provide for someone who is not a legal heir. Under the RBI’s claim directions, where a will exists and there is no dispute, the bank may settle on the basis of probate or, at its discretion, act on the will without probate if it is satisfied the will is genuine. Where heirs dispute the will, banks go by probate, a succession certificate or a court order. A clear will that matches your nominations keeps your family out of that last category.
Keep the will where your family can find it, and update it together with your nominations after a marriage, divorce, birth or death.
How to add or change a nominee
- List every account: savings and current accounts, fixed and recurring deposits, lockers, demat accounts, each mutual fund folio, PPF and other small savings.
- Log in to net banking, your broker’s app or the fund registrar’s portal, or visit the branch, and check what nomination is on record.
- Decide on simultaneous or successive nomination for bank deposits, and set clear percentages for demat and fund holdings.
- For a minor nominee, give the guardian’s details so the bank or registrar knows who can receive the money on the child’s behalf.
- Collect the acknowledgement and check that passbooks, statements and deposit receipts show the nominee.
- Tell your nominees where the accounts are. A nominee who does not know an account exists cannot claim it.
If you are building a corpus in deposits, the FD calculator and PPF calculator show how much your nominee could receive at maturity, which is a useful reminder of what is at stake.
Key takeaways
- Bank deposits now allow up to four nominees, simultaneous or successive; lockers allow successive nomination only.
- Demat accounts and mutual fund folios allow up to three nominees from 1 September 2026, and single holders must nominate or opt out.
- A nominee receives money as a trustee for the legal heirs, not as the final owner.
- With a nominee, banks must settle deposit claims within 15 calendar days of getting all documents, without asking for a succession certificate.
- Nomination and a will work together. Keep them consistent and review both after major family events.
This is general information, not legal advice. For large estates or a likely family dispute, talk to a lawyer.
