Coverage of Customers Under the Nomination Facility
The nomination facility is designed to minimize hardship and ensure quick settlement of claims for the family members of deceased depositors. This facility is crucial in expediting the transfer of funds, safe custody articles, and safety lockers to the rightful claimants. The Reserve Bank of India (RBI) has provided comprehensive guidelines for implementing the nomination facility for Scheduled Commercial Banks (excluding Regional Rural Banks), Primary (Urban) Co-operative Banks, and Deposit-taking Non-Banking Financial Companies (NBFCs). These instructions are detailed in the Master Circular on “Customer Service in Banks,” “Customer Service – UCBs,” and the Master Direction on “Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016.”
Despite these directives, RBI’s supervisory assessments have highlighted a significant gap in the coverage of nominations across deposit accounts. This lack of coverage could lead to undue hardship for the families and survivors of deceased depositors. To address this, the RBI has reiterated the importance of obtaining nominations for all existing and new deposit accounts, safe custody articles, and safety lockers.
The responsibility of monitoring nomination coverage lies with the Customer Service Committee (CSC) of the Board or the Board of Directors of the respective financial institutions. The CSC is required to periodically review progress and ensure targets are met. Additionally, the progress on nomination coverage must be reported quarterly by the supervised entities (SEs) through the RBI’s DAKSH portal, starting March 31, 2025.
Frontline staff at bank branches also play a pivotal role in promoting the nomination facility. They must be sensitized to assist customers in opting for nominations and handling claims for deceased account holders efficiently. Account opening forms must include options for customers to either opt for or decline the nomination facility, ensuring every customer is informed of its importance.
To raise awareness, banks and NBFCs are encouraged to publicize the benefits of the nomination facility through various channels, including media campaigns and targeted customer outreach. Periodic drives should also be conducted to achieve full nomination coverage across eligible customer accounts.
By prioritizing the nomination facility, financial institutions can mitigate hardships for customers’ families and ensure seamless claim settlement, aligning with the principles of customer service and financial inclusion.
