The Government of India has introduced the Banking Laws (Amendment) Bill 2024 in the Lok Sabha to modernize and improve banking regulations to enhance governance, protect investors, and streamline operational procedures within the banking sector.
Key Provisions of the Banking Laws (Amendment) Bill 2024
- Increased Nominees per Account
- Current System: One nominee allowed per bank account.
- Proposed Change: Up to four nominees allowed simultaneously with specified shares for each.
- Successive Nomination: Nominees listed in a specific order for claiming funds.
- Redefinition of ‘Substantial Interest’
- Current Threshold: ₹5 lakh.
- Proposed Threshold: ₹2 crore for directorships.
- Amendments to Reporting Dates
- Current Dates: Second and fourth Fridays of each month.
- Proposed Dates: 15th and last day of every month.
- Investor Education and Protection Fund (IEPF)
- Purpose: To manage unclaimed dividends, shares, interest, and bonds.
- Unclaimed Period: Seven consecutive years.
- Rights: Individuals can claim transfers/refunds from IEPF.
- Cooperative Banks Provisions
- Director Tenure: Extended from 8 years to 10 years.
Significance
- Consistency in Reporting: Standardizes reporting dates to the Reserve Bank of India (RBI).
- Reduction of Unclaimed Deposits: Addresses the issue of unclaimed deposits, which amounted to over ₹42,000 crore in March 2023.
- Enhanced Investor Protection: Strengthens the framework for protecting investor interests through the IEPF.
Acts Amended:
- Reserve Bank of India Act, 1934
- Banking Regulation Act, 1949
- State Bank of India Act, 1955
- Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
- Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980
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Frequently Asked Question:
What is the main objective of the Banking Laws (Amendment) Bill, 2024?
The main objective of the Bill is to modernize and improve banking regulations, enhance governance, protect investors, and streamline operational procedures within the banking sector.
How many nominees are currently allowed per bank account?
Currently, only one nominee is allowed per bank account.
What is the proposed change regarding nominees per bank account?
The proposed change allows for up to four nominees per account simultaneously with specified shares for each and nominees listed in a specific order for claiming funds.
What is the proposed threshold for ‘substantial interest’ regarding directorships?
The proposed threshold for ‘substantial interest’ regarding directorships is ₹2 crore, a decrease from the current threshold of ₹5 lakh.
What is the purpose of the Investor Education and Protection Fund (IEPF)?
The purpose of the IEPF is to manage unclaimed dividends, shares, interest, and bonds to protect investors and ensure their funds are safeguarded.