New Delhi: The Narendra Modi-led government has introduced the Banking Laws (Amendment) Bill, 2024 in Parliament, which seeks to increase the number of nominees per bank account from one to four, among other changes.
Government sources told ETV Bharat that the proposed Bill aims to improve governance standards, ensure consistency in reporting by banks to the Reserve Bank of India, enhance protection for depositors and investors, improve audit quality in Public Sector Banks, and extend the tenure of directors (excluding the chairperson and whole-time director) in cooperative banks.
If we discuss the salient features of the Bill, they include amendments to sections 45ZA, 45ZC, and 45ZE of the Banking Regulation Act, which will allow for up to four nominees. The Bill also introduces provisions for simultaneous and successive nominations, offering greater flexibility and convenience for depositors and their legal heirs, particularly concerning deposits, articles in safe custody, and safety lockers, sources said.
Additionally, the Bill seeks to amend section 38A of the State Bank of India Act, 1955, and section 10B of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980. These amendments will enable the transfer of unclaimed dividends, shares, and interest or redemption of bonds to the Investor Education and Protection Fund (IEPF), allowing individuals to claim transfers or refunds from the fund, thereby safeguarding investors' interests.
Sources indicate that the proposed Bill includes amendments to sections 18, 24, 25, and 56 of the Banking Regulation Act, and section 42 of the RBI Act. These amendments will revise the reporting dates for the submission of statutory reports by banks to the RBI, changing them from reporting on Fridays to the last day of the fortnight, month, or quarter. This adjustment aims to ensure consistency in reporting.
Additionally, to align with the Constitution (Ninety-Seventh Amendment) Act, 2011, the Bill proposes amending clause (i) of sub-section (2A) of section 10A of the Banking Regulation Act. This amendment would extend the tenure of directors (excluding the chairman and whole-time directors) in cooperative banks from 8 years to 10 years.
The amendment to clause (ne) of section 5 of the Banking Regulation Act, 1949, aims to redefine "substantial interest." The threshold for shareholding considered a substantial interest will be increased from ₹5 lakh to ₹2 crores, reflecting the present value, as the threshold was last set in 1968. Additionally, the amendment to sub-section (3) of section 16 of the Banking Regulation Act will permit a director of a Central Cooperative Bank to serve on the board of a State Cooperative Bank.
