No fee to be charged for updation of nominees for PPF accounts, says FM

In a move aimed at easing procedures for small savers, Finance Minister Nirmala Sitharaman announced on Thursday that no fees will be charged for updating or adding nominees in Public Provident Fund (PPF) accounts. The government has made the necessary amendments through a notification, which was issued in the Gazette on April 2, 2025.

 

This update follows a recent development where financial institutions were charging a fee for the updation or modification of nominee details in PPF accounts. 

 

Addressing the concern, Sitharaman took to social media platform X (formerly Twitter) to announce the change, stating that the fee structure had been revised to benefit the account holders.

 

 

"The Government Savings Promotion General Rules 2018 have been amended through a Gazette Notification dated April 2, 2025, to eliminate any charges for nominee updation in PPF accounts," the Finance Minister wrote in her post. 

 

The gazette notification has done away with the fee of Rs 50 for cancellation or change of nomination for small savings schemes run by the government.

 

"The Banking Amendment Bill 2025, passed recently, allows nomination up to 4 persons for payment of depositors' money, articles kept in safe custody and safety lockers," she said.

 

Additionally, the announcement comes in the wake of the passage of the Banking Amendment Bill 2025, which brings forward several significant changes in banking regulations. Sitharaman highlighted that the new legislation permits the nomination of up to four individuals for the payment of depositors' money, articles held in safe custody, and assets stored in safety lockers. This change aims to provide more flexibility and ensure smoother transitions in case of unforeseen circumstances. 

Kunal Sharma, Partner, Singhania & Co explains this: 

 

For example, consider a person who wishes to nominate her two children and her elderly mother as beneficiaries of her PPF account and safety locker. Under the previous regime, the person would not only have faced charges for updating nominee details but also limitations regarding the number of nominees. This restrictive framework could result in protracted legal disputes or unintended exclusion of rightful beneficiaries.  With the recent amendments, the person can nominate all three individuals without incurring charges, thereby simplifying her estate planning process and safeguarding her family’s interests. While this enhancement promotes flexibility and acknowledges evolving family structures, it also raises potential legal and procedural concerns. For instance, multiple nominations could lead to conflicts if there is ambiguity in the rights of nominees vis-à-vis legal heirs. Additionally, without clear guidelines on priority and dispute resolution mechanisms, financial institutions may face difficulties in executing these nominations seamlessly. Thus, while the reform seeks to modernize succession planning, its effectiveness will depend on the implementation frameworks that balance depositor autonomy with legal certainty.  

"Nomination is a very important aspect of the deposits made by depositors, and they should be always encouraged to make and change the nomination in a hassle-free manner. Seamless and cost efficient updation process of nomination ensures that depositors make timely updating in their nomination as and when required, so that after their demise, the rightful and surviving nominee gets the benefit of the deposits," said Saurabh Sharma, Partner, Juris Corp.

   

One of the major changes included in the bill is a redefinition of what constitutes "substantial interest" in a bank. Under the amendment, the threshold for substantial interest is being raised from the current Rs 5 lakh to Rs 2 crore. This revision aims to modernize regulations that have not been updated in nearly six decades.

 

The bill also seeks to extend the tenure of directors (excluding the chairman and whole-time director) in cooperative banks. The new legislation will allow directors to serve for up to 10 years, an extension from the previous limit of 8 years. This change aligns with the Constitution (Ninety-Seventh Amendment) Act, 2011, which sought to bring greater stability to cooperative bank. 

Kanika Chugh, Partner, SKV Law Offices explains why this matters: 

 

This addresses a long-standing friction point in small savings administration. While the fee was nominal, its removal lowers the threshold for account holders to keep nominations current, especially in response to life events such as marriage, childbirth, or succession planning. 

 

For example, an individual who initially nominated a sibling at the time of opening a PPF account can now update that nomination to include a spouse or children — without incurring any cost. This not only ensures efficient transmission of benefits but also significantly reduces the risk of unclaimed deposits, a concern increasingly relevant to the financial ecosystem. 

 

Although the recently enacted Banking Laws (Amendment) Bill, 2025 expands nomination limits in the banking sector; it is a complementary reform. The waiver of service charges in PPF accounts directly impacts a broader base of retail investors and is likely to have a more immediate operational effect across post offices and banks administering small savings schemes.