Govt to table Banking Laws (Amendment) Bill in Lok Sabha; bank nominee limit set to increase to 4

The Finance Minister will move the Banking Laws Amendment Bill for passage during the Winter Session of Parliament, which begins today, Monday, November 25. The government aims to pass the Bill in the Lok Sabha today itself, though this will depend on parliamentary proceedings.

The Bill, introduced in the previous Monsoon Session, seeks to enhance services for depositors and provide investors access to unclaimed funds.

Key highlights of the Bill

Increased nominations for bank accounts

The Bill proposes to raise the number of nominations allowed per bank account from the current limit of one to four.

Officials believe this will benefit depositors, bank locker holders, and their nominees.

Transfer of unclaimed assets

It facilitates the transfer of unclaimed dividends, shares, and interest or redemption proceeds of bonds to the Investor Education and Protection Fund (IEPF).

Individuals will be permitted to claim transfers or refunds from the IEPF, ensuring better protection of investors’ interests.

Redefinition of “substantial interest”

The definition of “substantial interest” for individuals will be revised, raising the threshold from ₹5 lakh (set in 1968) to ₹2 crore.

Revised reporting deadlines for banks

The Bill proposes a change in the reporting dates for statutory submissions by banks to the RBI. Reports would now be due on the last day of the fortnight, month, or quarter, replacing the current Friday deadline.

This change aims to standardise reporting timelines across all banks.

Freedom in auditor remuneration

Amendments will grant public sector banks the autonomy to decide the remuneration of auditors. This flexibility is expected to improve audit quality by enabling banks to hire top talent.

Legislative scope

The Bill, approved by the Union Cabinet in August 2024, amends multiple laws, including:

• 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 and 1980

In her FY24 Budget speech, Finance Minister Nirmala Sitharaman said:
“To improve bank governance and enhance investors’ protection, certain amendments to the Banking Regulation Act, the Banking Companies Act, and the Reserve Bank of India Act are proposed.”