Section 45ZA of the Banking Regulation Act, 1949: Nomination for Payment of Depositors' Money
Section 45ZA of the Banking Regulation Act, 1949 governs nomination in respect of money held in bank deposit accounts. It enables a depositor, or all depositors jointly, to nominate eligible persons who may receive the deposit after the death of the sole depositor or all joint depositors.
Meaning and scope of Section 45ZA
The section primarily regulates the relationship between the bank, the depositor and the nominee for payment of the deposit after the depositor's death. A valid payment by the bank under Section 45ZA gives the bank a statutory discharge from its liability for that deposit. However, the section also preserves any independent right or claim that another person may have against the person who receives the money.
| Provision | Section 45ZA, Banking Regulation Act, 1949 |
|---|---|
| Subject | Nomination for payment of bank deposit money |
| Maximum nominees | Up to four persons |
| Types of nomination | Successive nomination or simultaneous nomination |
| Joint deposits | All depositors together may make the nomination |
| Minor nominee | The depositor may appoint a person to receive the amount during the nominee's minority, subject to the prescribed procedure |
Current text and effect of Section 45ZA
Sub-section (1): Where a deposit is held by a banking company to the credit of one or more persons, the depositor, or all the depositors together, may nominate in the prescribed manner one or more persons not exceeding four, either successively or simultaneously, to whom the amount of deposit may be returned on the death of the sole depositor or all the depositors.
Sub-section (1A): If more than one person is nominated successively, only one nomination operates at a time in the order of priority governed by Section 45ZG.
Sub-section (1B): If more than one person is nominated simultaneously, all such nominees may receive the deposit in the declared proportions. The nomination cannot exceed four persons; the percentage share of each nominee must be stated; the nomination must cover the whole deposit; and the statutory consequences apply if a nominee dies before receiving the deposit.
Sub-section (2): A valid nomination operates notwithstanding another law or testamentary or other disposition in relation to the bank's payment of the deposit. On the death of the depositor or all joint depositors, the nominee becomes entitled to the depositor's rights in relation to the deposit for the purpose contemplated by the section, unless the nomination is varied or cancelled in the prescribed manner.
Sub-section (3): If the nominee is a minor, the depositor may appoint, in the prescribed manner, a person to receive the deposit during the minority of the nominee if the depositor dies while the nominee is still a minor.
Sub-section (4): Payment made by the banking company in accordance with Section 45ZA gives the bank a full discharge of its liability in respect of the deposit. The proviso preserves any right or claim that another person may have against the person who received the payment.
Successive and simultaneous nominations
Successive nomination
In a successive nomination, nominees are placed in an order of priority. The first nominee is effective if that nominee survives the depositor or depositors. A later nominee becomes effective only when the nominee or nominees higher in priority have died. See Section 45ZG - Priority of successive nominations.
Simultaneous nomination
In a simultaneous nomination, up to four nominees may be nominated together. The percentage share of the deposit allotted to each nominee must be expressly stated and the allocation must cover the whole deposit. If one simultaneous nominee dies before receiving the deposit, the nomination relating to that nominee's portion becomes ineffective in the manner provided by law.
Nomination rules and prescribed forms
The Banking Companies (Nomination) Rules, 1985 prescribe the procedure for making, cancelling and varying nominations. The traditional prescribed forms for bank deposits include Form DA 1 for nomination, Form DA 2 for cancellation and Form DA 3 for variation. Banks may provide their own customer-facing versions consistent with the applicable statutory framework and current rules.
Effect of payment to a nominee
Section 45ZA protects the banking company when it pays the deposit in accordance with a valid nomination. The bank is discharged from liability for the deposit, but the statutory discharge does not necessarily settle every beneficial or succession claim between the nominee and other persons. The proviso to sub-section (4) expressly preserves claims that may be made against the recipient of the money.
Related provisions
Section 45ZA should be read with Section 45ZB, which deals with notices of claims by other persons regarding deposits, and with Section 45ZG, which sets out the priority rules for successive nominations.
Practical points for depositors
- Check that the nomination is recorded by the bank and obtain acknowledgement where available.
- For joint deposits, the nomination should be made by all depositors together in the prescribed manner.
- Where simultaneous nominees are used, state each nominee's percentage share clearly and ensure the entire deposit is covered.
- Review and update the nomination after major family or succession changes.
- Where a nominee is a minor, follow the prescribed procedure for appointing a person to receive the amount during minority.
Note: This page is a general legal reference. Bank procedures and prescribed forms should be checked with the bank and the latest statutory rules before acting.