Nomination and Transmission in 2026: Bank Accounts, Demat and Mutual Fund Folios

Most Indian households spend years choosing where to invest and almost no time on a question that decides whether the family can actually reach that money: who is recorded as the nominee, and what happens the day a claim has to be made. Two separate reform tracks have changed the answer over the past two years — one for bank deposits and lockers, driven by an amendment to the Banking Regulation Act, and one for demat accounts and mutual fund folios, driven by SEBI. The two systems now look more alike, but they are not identical, and the differences matter.

Why the paperwork gap exists at all

Nomination is an administrative shortcut. It tells the bank, depository or asset management company whom to pay when the holder dies, so that the institution gets a valid discharge without the family first having to produce a succession document. Where it is missing, assets drift. SEBI's investor FAQs put the consequence plainly: in the absence of nomination, shares could become unclaimed after the holder's demise. The regulatory push of the last two years — more nominees, cleaner forms, lighter documentation for genuine claimants — is essentially an attempt to stop that drift at the source.

Bank accounts and lockers: up to four nominees since 1 November 2025

The Banking Laws (Amendment) Act, 2025 reworked the nomination sections of the Banking Regulation Act, and the relevant provisions were brought into effect from 1 November 2025. The Banking Companies (Nomination) Rules, 2025 were notified alongside, together with RBI directions on nomination in deposit accounts, safe deposit lockers and articles kept in safe custody, which come into force from the same date.

The core change is choice:

• •Multiple nominees. A customer may nominate up to four persons, either simultaneously or successively.
• •Simultaneous nomination (deposits) lets you name up to four people with a stated share or percentage of entitlement for each, and the total must equal 100 per cent.
• •Successive nomination means the next name becomes operative only upon the death of the nominee placed higher, and so on down the list.
• •Lockers and articles in safe custody can use only the successive route — physical contents cannot sensibly be split by percentage.

Two details are easy to miss. First, where a simultaneous nomination is in place and a nominee dies before receiving the deposit, the nomination becomes ineffective in respect of that nominee alone; the rest of the arrangement survives, and the orphaned share is settled under the rules that apply to accounts without a nominee clause. Second, nomination is a facility, not a precondition: RBI's directions state that a prospective customer shall not be denied or delayed an account solely on the ground of refusal to make a nomination, provided other account-opening requirements are met.

Demat accounts and mutual fund folios: up to ten names

SEBI's overhaul of nomination in the securities market ran through a circular dated January 10, 2025, read with a clarificatory circular dated February 28, 2025, with later phases implemented in stages and further modified in 2026 under the regulator's "ease of doing investments" theme. The direction of travel across all of them is the same.

The headline number is the nominee count. SEBI's board papers record that the number of nominees was increased to ten from the existing limit of three, on the reasoning that ten is sufficient to address ordinary requirements of individual investors. Investors can also nominate a person who shall be authorised to conduct transactions on their behalf in the event of their own incapacitation — a facility that sits closer to a power of attorney than to classic nomination, and one that has no equivalent in deposit accounts.

On joint holdings, the rule of survivorship continues to apply: where two or more people have opened a demat account or jointly own units of mutual fund schemes, on the death of any one of them the right, title and interest pass to the surviving joint holders. Nomination for jointly held demat accounts and folios is optional; it is new single-holder investors and unitholders who must mandatorily provide a 'Choice of Nomination'. And where a single-holder investor wants to opt out altogether, SEBI's framework makes the opt-out facility available only through an offline process, so that opting out cannot become a careless default click during online onboarding.

A nominee is a trustee, not an heir

This is the single most misunderstood point in Indian personal finance, and SEBI has now written it into the form itself: the nominee receives the assets held in the account or folio of the deceased investor as trustee and on behalf of the legal heirs. Nomination decides who collects; succession law, or a valid Will, decides who ultimately keeps.

Two corollaries follow from the same framework. If a nominee dies during the investor's lifetime, that nominee's own legal heirs acquire no right, title or interest merely by virtue of the nomination. And nomination does not override creditors: where units or securities are subject to a duly created pledge securing a credit facility, that charge requires due discharge before anything moves onward.

What a claimant is actually asked for

Documentation is tiered by value, and the tiers differ between listed securities and mutual fund units. The table below sets out thresholds that appear in SEBI's RTA-related FAQs and in AMFI's transmission guidelines.

Where a valid nomination exists and the nominee's details are already on record, the position is far lighter: no other documentation including affidavits, indemnities, undertakings, attestations or notarisations is to be demanded from the nominee. That contrast — a form and a death certificate, versus a court-issued succession document — is the whole practical case for keeping nominations current. One more operational point for fund investors: transmission is completed only once the claimant's KYC status is "KYC complied", so an incomplete KYC can stall an otherwise clean claim.

A short audit you can run yourself

Nomination is a record-keeping decision rather than a product decision, and it is worth checking rather than assuming. Points to verify, folio by folio and bank by bank:

1. Whether each single-holder folio and demat account carries a nomination or a conscious opt-out.

2. Whether bank accounts use simultaneous or successive nomination, and whether simultaneous shares add up to 100 per cent.

3. Whether nominee contact details and the relationship with the investor are recorded, since the intermediary needs them to begin transmission.

4. Whether the nomination still reflects reality after a marriage, divorce, birth or death in the family.

5. Whether the nominee's KYC is complete.

6. Whether your Will, if you have one, says the same thing as your nomination forms — because the nominee holds for the heirs either way.

The direction of the rules

Both regulators are converging on a simple idea: more named people, clearer shares, lighter documents for honest claimants, and fewer assets stranded in suspense accounts. For an investor, that reduces friction but does not remove responsibility. The institutions can only act on what is in their records, and those records are only as good as the last time you updated them.

E-Square Tip: Nomination details sit in at least four different places for most families — bank accounts, lockers, demat accounts and mutual fund folios — and each is governed by its own form and its own limit. Make one list of every account, note the nominee and percentage recorded against it, and keep the acknowledgements where your family can find them. The limits differ (up to four persons for bank deposits, up to ten for demat accounts and folios), so do not assume one instruction travels across all of them.