What changed
RBI reinforced nomination rules after an Allahabad High Court observation. Banks must now generally insist on nomination for single accounts, and if declined, obtain a written declination or record the refusal. Previously, banks only had to publicize the facility.
What it means for you
Banks must proactively push nomination for single accounts to protect depositors' families from legal hassles. This reduces litigation risk and improves customer service. However, banks cannot deny account opening solely due to non-nomination, balancing customer choice with regulatory intent.
What you must do
- Update account opening forms to include a nomination section and a declination letter template.
- Train staff to explain nomination benefits and obtain written declination if customer refuses.
- Record refusal on account opening form if customer declines both nomination and declination letter.
- Apply same procedure to sole proprietary concern accounts.
- Ensure no account is rejected solely for non-nomination.
Who it affects
State and District Central Co-operative Banks, All commercial banks (by implication), Deposit account holders opening single accounts, Sole proprietary concern account holders
Can a bank refuse to open a single account if the customer refuses nomination?
No, RBI explicitly states that under no circumstances should a bank refuse to open an account solely because the customer declined nomination.
What if the customer refuses to give a declination letter?
The bank must record the fact of refusal on the account opening form and proceed with opening the account if otherwise eligible.
Does this apply to sole proprietary concerns?
Yes, the same procedure outlined for single deposit accounts applies to deposit accounts in the name of sole proprietary concerns.