The Central Government has in consultation with Reserve Bank of India framed the banking companies "Nomination Rules" 1985. Under these rules, nomination facilities are available to bank depositors under Banking Regulation Act 1949 (Sec. 45ZA)
 

1. NOMINATION RULES 1985 :

THE FOUR IMPORTANT CLAUSES OF THIS SECTION ARE:

• Bank account holders having deposit accounts in their individual names or in the joint names of two or more individuals, can individually or as the case may be jointly may nominate one person to whom in the event of the death of the sale depositor or the death of all depositors, the amount of deposit may be returned by the banking company.

• In respect of such deposit where a nomination is registered to confer on any person the right to receive the amount of deposit, the nominee shall, on the death of the sole depositor or, as the case may be on the death of all the depositors, become entitled to all the rights in relation to such deposit to the exclusion of all other persons.

• Where the nominee is a minor, it shall be lawful for the depositor making the nomination to appoint in the prescribed manner any person to receive the amount of deposit in the event of his death during the minority of the nominee.

• Payment by a banking company in accordance with the provisions of this section shall constitute a full discharge to the banking company of its liability in respect of the deposit.
  
  2. OTHER RULES RELATING TO NOMINATION:
• The nomination can be made only in respect of a deposit which is held in the individual capacity of the depositor and not in any representative capacity as the holder of any office or otherwise. However as per the recent RBI guidelines, nomination facility may also be extended in respect of deposits held in the name of a sole proprietary concern.
• Nomination as well as cancellation or variation can be made by the depositor/s at any time during which the deposit is held. In the event of death of anyone of the joint depositors, the surviving depositor/s can vary or cancel the subsisting nomination. However, in the absence of any prior nomination in respect of a deposit held jointly, the survivor/s can validly make a nomination afresh.
• A nomination or cancellation or variation of nomination shall not cease to be in force merely because the deposit in respect of which nomination, cancellation or variation registered, has not been renewed from time to time at the time of renewal of such deposit.
• The bankers are required to display prominently in their premises about the availability of nomination facility and they have to educate all the depositors so as to make them avail nomination facilities in their own interest.
• Premature payment of deposit subsequent to the death of the depositor/s to the nominee is permissible.
• The bank shall not grant any loan to the nominee against the security of deposit subsequent to the death of depositor/s.
• In the case of claim from both the nominee and the legal heirs after the death of the depositor, the bankers are well in order in making payment to the nominee in the normal course of business. In such cases, payment of deposit amount to the nominee can be withheld only by an order from the court of competent jurisdiction.
• Where there is a valid nomination, if the depositor writes a will settling in favour of another person, in the absence of any intimation to the bank from the heirs/executor of the will (followed by production of any decree, order from a court) bank will be discharged by payment to the nominee. Thereafter heirs/executors are legally entitled to claim from the nominee only.
• The bankers may quote as ' Nomination Registered' in the deposit receipt and pass books after obtaining concurrence from the depositor.
• Where the bank comes to know reliably about the death of a depositor or depositors, where there is a nomination in force, it will be in order for the bank to communicate the nominee if he/she does not make a claim within a reasonable time, say three months. Though this intimation is not obligatory, it will go a long way to prove that banks care for the customers.