NEW DELHI: The Banking Laws (Amendment) Bill, 2024, which the government tabled in parliament on Friday, proposes simultaneous and successive nominations of up to four nominees. The move is aimed at offering greater flexibility and convenience for depositors and their legal heirs, especially concerning deposits, articles in safe custody, and safety lockers.
Successive nomination refers to the process where multiple nominees are listed in a particular order. If the first nominee is unavailable to claim the funds, the second nominee would be called upon, followed by the third, and so on.
Additionally, the Bill proposes the transfer of unclaimed dividends, shares, and interest or redemption of bonds to the Investor Education and Protection Fund (IEPF). Individuals would then be able to claim transfers or refunds from the fund, ensuring the protection of investors' interests.
A significant amendment within the Bill seeks to increase the threshold for what constitutes a 'substantial interest' in shareholding from the current Rs 5 lakh, which was set in 1968, to Rs 2 crores.
Another major change outlined in the Bill is the revision of the reporting dates for the submission of statutory reports by banks to the Reserve Bank of India (RBI). The Bill proposes shifting the reporting date from the current 'reporting Friday' to the last day of the fortnight, month, or quarter. This amendment aims to ensure consistency in reporting practices.
The Bill also introduces important provisions concerning cooperative banks. To align with the Constitution (97th Amendment) Act, 2011, the Bill proposes amending clause (i) of sub-section (2A) of section 10A of the Banking Regulation Act. This would extend the tenure of directors, excluding the chairman and whole-time directors, in cooperative banks from eight years to ten years.
Furthermore, the Bill seeks to amend subsection (3) of section 16 of the Banking Regulation Act to permit a director of a Central Cooperative Bank to serve on the board of a State Cooperative Bank, thus allowing for greater governance flexibility in cooperative banking institutions.
The Banking Laws (Amendment) Bill, 2024, represents a comprehensive effort to modernize banking regulations, ensuring they keep pace with evolving financial practices and offer enhanced protections for depositors and investors alike.