RBI Notification to all Commercial Banks, Urban Co-operative Banks, Deposit Taking NBFCs: The Reserve Bank of India (RBI) has issued instructions to all banks, primary urban co-operative banks and NBFCs (Non-Banking Financial Companies) regarding nominees in fixed deposits (FD) and savings accounts. No issued on FridayAccording to the notification, nomination is now mandatory for every FD, savings account and locker. This step of the Central Bank is to save the family members of the bank customer from difficulties in the event of his death.
Why is nomination important?
RBI has directed all commercial banks and NBFCs to get nomination for fixed deposits, savings accounts and lockers from all their existing and new customers. Its purpose is to save the family members from difficulties in case of death of the customers using FD, savings account or bank locker facility.
According to RBI, the objective of the nomination facility is to simplify the settlement of claims and reduce difficulties for the family members of the depositors on their death. Instructions on nomination facility for banks and NBFCs have been included in the Master Circular and Master Guidelines. Apart from this, the existing instructions also state that banks should provide information to their customers about the nomination facility and explain to them its benefits.
Reserve Bank of India has observed that nomination facility is not available in many deposit accounts. This creates the problem that when a depositor dies, his family members may have difficulty accessing the money. Therefore, RBI has directed all banks to seek enrollment from existing and new customers, whether they are owners of fixed deposit accounts, savings accounts or safety lockers.
The Customer Service Committee (CSC) or Board of Directors will have to regularly review the status of enrollment coverage. The progress report of this review will be submitted on the DAKSH portal of the Reserve Bank on a quarterly basis starting from March 31, 2025. Additionally, frontline staff at branches will be trained to effectively handle nomination requests and claims of deceased customers. The account opening form will be modified in such a way that customers are given the option to choose a nominee or opt out of the nomination facility.
Apart from directly informing customers, banks have been advised to publicize the benefits of the nomination facility using various media channels. Under this, banks should run campaigns from time to time to ensure that enrollment is done in all eligible accounts.
