The government, as part of the Banking Laws (Amendment) Bill, has made several changes to the banking regulations.
On Friday, August 9, Union Finance Minister Nirmala Sitharaman tabled the Banking Laws (Amendment) Bill, 2024 in the Lok Sabha during the Parliament session. With the latest amendments, there have been crucial changes made to the key banking regulations. The proposed amendments will have its effect on the Reserve Bank of India Act, the Banking Regulation Act, and the State Bank of India Act, among others.
The first and foremost amendment proposed is regarding the enhancement of the nomination process, and now depositors will be allowed to nominate up to four nominees simultaneously and successively. Hence, it will offer an increased flexibility to depositors and their legal heirs, especially regarding the articles in safe custody and safety lockers. The nominated individuals then will have rights to these assets in the event of the depositor's demise.
The idea of successive nomination means that several nominees will be listed in a specific order. If the primary nominee is not able to claim the funds, the next in the list would be contacted accordingly.
Moreover, the Bill has now proposed the allocation of unclaimed dividends, shares, interest, or redemption of bonds to the Investor Education and Protection Fund (IEPF). This will allow users to request transfers or refunds from the fund. Moreover, the threshold defining a 'substantial interest' in shareholding is proposed to be raised to Rs 2 crores from the existing Rs 5 lakh.
Last but not the least, the deadlines for banks to submit statutory reports to the Reserve Bank of India (RBI) has been adjusted. As per the changes, the reporting deadline from the current 'reporting Friday' will now be moved to the final day of the fortnight, month, or quarter as per the proposed bill.
1) The bill is looking to increase the option for nominees per bank account to four from the existing one.
2) Redefinition of the 'substantial interest' for directorships, which can be increased from the current ₹5 lakh, set nearly 60 years ago, to ₹2 crore.
3) Giving banks more flexibility in determining the pay for statutory auditors.
4) Change of regulatory reporting dates for banks to the 15th and last day of each month, unlike the current second and fourth Fridays.
5) The Bill has proposed amendments to the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949, the State Bank of India Act, 1955, and the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980.
6) Allowing a Director of a Central Cooperative Bank to serve as the Board Member of a State Cooperative Bank.
