Welcome feature of Successive Nominations introduced for bank-accounts

Taking clue from unique phenomenon of Successive Nominations in LIC of India, Government of India notified through Gazette of India dated 15.04.2025, Banking Laws Amendment Act 2025 where its sections 10 to 13 allowed welcome feature of up to four Successive Nominations in all accounts and lockers of the banks in private and public sector. This feature is very useful in case the only one nominee nominated dies before the death of the account holder. Now it will make second nominee to become nominee and so on up to four successive nominees without any need of account-holder approaching the bank for change in nominee.

Usually bank-customers earlier did not care for going to the bank for change in nominee in case of death of earlier nominee resulting in regular heavy increase in unclaimed bank-deposits. This aspect was noticed during period of Covid-19 because of deaths of many such nominees in bank-accounts making Government of India to introduce public-utility feature of Successive Nominations in bank-accounts.

Union Finance Minister Nirmala Sitaraman on 10.06.2025 while chairing 29th meeting of the Financial Stability and Development Council (FSDC) in Mumbai desired that the drive for refund process of unclaimed amounts should be conducted in coordination with the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Ministry of Corporate Affairs (MCA), Pension Fund Regulatory and Development Authority (PFRDA) and Insurance Regulatory and Development Authority of India (IRDA) along with banks, pension agencies and insurance companies. As per the latest RBI annual report, the amount credited to the Depositor Education and Awareness (DEA) Fund increased by 25 per cent to rupees 97,545.12 crore at the end of Financial Year 2024-25, from rupees 78,212.53 at the end of Financial Year 2023-24.  All banks have to transfer unclaimed deposits after ten years to the DEA Fund maintained by the RBI. Frauds are reported through some bank-employees misappropriating funds in inoperative accounts. RBI should direct all banks to inform account-holders/depositors through Registered Post about their existing balance and to approach banks either to make accounts operative or close these in a time-bound period after which all such balances may be transferred to Depositor-Educative-Awareness (DEA) Fund.

Now with introduction of Successive Nominations in bank-accounts, further accumulation in unclaimed bank-deposits can be largely reduced if the phenomenon is brought in practice by banks in a user-friendly manner. RBI should direct all banks to urgently make available facility of Successive Nominations by all means including manual or internet banking. Form for Successive Nominations should be available on websites of all banks in a manner that it may be filled on computer itself in the manner passport-form is filled in case account-holder prefers visiting bank-branch for the purpose. Details of nominees should be endorsed in pass-books.

SEBI reluctant to introduce Successive Nominations in DEMAT accounts

Referring to the 48-page document –Amendments in regulations to revise and revamp Nomination facilities in the Indian Securities Market– provided by Security and Exchange Board of India (SEBI) in course of CIC-matter in file-number CIC/SEBIH/A//2025/112459 which mentioned that two out of four entities favoured Successive Nominations in DEMAT accounts while the other two were against the idea, another RTI application had to be filed with SEBI on 01.06.2025 also with under-mentioned aspects-

1. Names of entities having favoured idea of Successive Nominations in DEMAT accounts
2. Names of entities which opposed idea of Successive Nominations in DEMAT accounts
3. Complete information together with all related correspondence/file-notings/documents etc on selecting entities by SEBI for sending their respective views on introducing Successive Nominations in DEMAT accounts
4. Complete information together with all related file-notings/correspondence/documents etc on subsequent action taken by SEBI on introducing Successive Nominations in DEMAT accounts ever since SEBI favoured idea of introducing Successive Nominations in DEMAT accounts
5. Competent Authority at SEBI to finally decide introducing Successive Nominations in DEMAT accounts

But Central Public Information Officer (CPIO) at SEBI in tune with SEBI-tradition to hide every information, in a clubbed response declined information on each of these points by invoking sections 8(1)(a) being strategic in nature, 8(1)(e) held in fiduciary capacity and 8(1)(j) being of personal nature of RTI Act thus becoming generous enough in leaving to the option of RTI applicant to select any out of these three exemptions.

But during the CIC-hearing on 26.05.2025 in case-number CIC/SEBIH/A//2025/112459, it was observed that information now sought was additional information for which separate RTI application was needed which now was done. Even then SEBI declined to share information depicting its reluctance to introduce Successive Nominations in DEMAT accounts that too despite Union Finance Minister’s speech on 10.06.2025 at 29th meeting of the Financial Stability and Development Council (FSDC) in Mumbai. It is time that Union Minister for Finance and Union Minister for Corporate Affairs may direct SEBI to introduce Successive Nominations in DEMAT accounts with immediate effect.

DEA should introduce Successive Nominations in all government savings-schemes 

According to Business Allocation Rules of the Government of India, all government savings-schemes like including Public Provident Fund (PPF), Senior Citizens Savings Scheme (SCSS) etc come under Department of Economic Affairs (DEA). Even National Savings Institute (NSI) comes under DEA. But in the same CIC-matter in case-number CIC/SEBIH/A//2025/112459, DEA instead of coming clear on the aspect, unnecessarily transferred RTI application to Department of Financial Services (DFS) which in turn transferred it back to RBI where RTI application was originally filed. DEA and NSI, whosoever is competent authority to take decision in this regard, should introduce Successive Nominations in all government Savings Schemes.

Successive Nominations should also be compulsory in deposits made in private firms/companies

It is high time that Successive Nominations may be made compulsory in all deposits made in private firms/companies etc. A copy of such nomination-forms should be compulsorily attached with audit-reports of the assesse companies. Income Tax Return Forms should include column for undertaking by assesse-firms about nomination-forms having been taken from depositors in those firms. Such a system will in addition safeguard deposits made by depositors in private firms and companies. Such nomination-forms must also be made compulsory for existing deposits in private companies/firms etc.

Successive Nominations will reduce court-cases and spent on time & money in litigation

Phenomenon of Successive Nominations if made compulsory in all types of deposits including also in DEMAT accounts, government savings schemes and deposits in private firms/companies etc (already introduced for bank-accounts) will drastically reduce number of court-cases in our presently over-burdened judicial system. It will save unnecessary huge spent of time, money and resources on litigations to claim money by depositors.

New legislation/s may be there if needed for Successive Nominations in accounts other than in banks 

In case fresh legislation is required for introducingSuccessive Nominations in DEMAT accounts, government-savings-schemes and deposits made in private companies/firms etc, then it should be done by Government of India for ensuring phenomenon of Successive Nominations in all types of deposits. It will be in interest of all concerned including pubic-authorities also because of saving of man-hours being spent in fulfilling formalities of change in nominees in case of death of nominee.