• durgesh dubey
• 10 Aug, 2024

Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman stated, "The Banking Regulations amendments that we are bringing in. There are many reasons why we brought the amendment act. It's been pending for some time in the sense it was long awaited. It also had some realignments as regards the cooperative sector banking arena and the nomination is one of the things which is the customer-friendly step because I think it is important for customers to have that choice and also to make sure that the nominee later on don't face any difficulty in claiming what is rightfully there...".

Reserve Bank of India (RBI) Governor Shaktikanta Das says, "The nomination issue has been pending for a long time and also this reporting Friday improves the ease of doing business so far as the banks are concerned also, and naturally for comparison purposes, it's good. So far as the unclaimed deposits are concerned, last year we launched a special drive under which we advised every bank that each branch, depending on the number of unclaimed deposits they have, each branch should proactively on their own, go out of their way, take special steps to identify top ten unclaimed deposits and reach out to the persons. The progress has been satisfactory..."

The proposed amendments aim to revise several key banking laws, including the Reserve Bank of India Act, the Banking Regulation Act, and the State Bank of India Act.

A notable change in the Bill is the proposal to increase the number of nominees allowed per bank account from one to four, according to a report by PTI. This adjustment is intended to provide account holders with more flexibility and options. The Bill also seeks to transfer unclaimed dividends, shares, and bond payments to the Investor Education and Protection Fund (IEPF), ensuring that people can claim these funds or receive refunds, thereby safeguarding investor interests.

Moreover, the Bill suggests redefining the concept of 'substantial interest' for bank directorships by raising the threshold from the current ₹5 lakh to ₹2 crore, updating a limit that has remained unchanged for nearly 60 years. The proposed amendments aim to improve governance standards, ensure consistent reporting by banks to the Reserve Bank of India, enhance depositor and investor protection, improve audit quality in public sector banks, streamline the nomination process for customers, and extend the tenure of directors in cooperative banks.

Given the evolution of the banking sector, the Bill's Statement of Objects and Reasons emphasizes the necessity of amending five crucial Acts to strengthen bank governance and protect investors. The Bill, which was recently approved by India's cabinet, seeks to update the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949, the State Bank of India Act, 1955, and the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980.

Specifically, the Banking Laws (Amendment) Bill of 2024 proposes enhancing the nomination process by allowing depositors to designate up to four nominees both simultaneously and successively. This change is designed to offer greater flexibility and convenience to depositors and their legal heirs, particularly in relation to deposits, safe custody items, and safety lockers. The process of successive nomination would allow for a structured approach where, if the primary nominee cannot claim the assets, the next listed nominee would be approached, and so on.