Finance Minister Nirmala Sitharaman is set to introduce the Banking Laws Amendment Bill during the Winter Session of Parliament, starting Monday, November 25. The government aims to pass the Bill in the Lok Sabha on the same day, though the timing will depend on the progress of parliamentary proceedings.
Originally introduced in the previous Monsoon Session (August 9), the Bill seeks to improve services for depositors, aiming to streamline banking regulations. It also focuses on providing investors access to unclaimed funds, which will facilitate greater financial transparency and security.
The Bill seeks to amend several key banking laws to update and strengthen the regulatory framework. These include:
- Reserve Bank of India Act, 1934
- Banking Regulation Act, 1949
- State Bank of India Act, 1955
- Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980
Increased Nominations for Bank Accounts
The Banking Laws (Amendment) Bill, 2024, proposes to increase the number of nominations allowed per bank account from the current limit of one to four. This change applies to both deposits and bank lockers, offering greater flexibility for depositors.
Transfer of Unclaimed Assets, Fund Distribution
The Banking Laws (Amendment) Bill, 2024, makes it easier for unclaimed assets like dividends, shares, and bond proceeds to be transferred to the Investor Education and Protection Fund (IEPF). People will be able to claim these unclaimed funds from the IEPF.
Issue Faced After Death Of Account Holder
If the depositor dies, the appointed nominee(s) will be able to access the deposit, articles, or locker. The Bill provides the option for simultaneous or successive nominations.
Redefinition of “Substantial Interest”
The Banking Laws (Amendment) Bill, 2024, revises the definition of "substantial interest" for individuals. The threshold for substantial interest has been raised from Rs 5 lakh (a limit set in 1968) to Rs 2 crore.
Revised Reporting Deadlines for Banks
The Bill also proposes new reporting deadlines for banks' statutory submissions to the RBI. Instead of the current Friday deadline, reports will now be due on the last day of the fortnight, month, or quarter.
Freedom in Auditor Remuneration
The Banking Laws (Amendment) Bill, 2024, will grant public sector banks the autonomy to decide the remuneration of their auditors. This flexibility is expected to enhance the quality of audits by allowing banks to attract top-tier talent.