The Banking Laws (Amendment) Bill, 2024, in the previous year passed by the Lok Sabha, introduces significant reforms aimed at strengthening governance and enhancing customer convenience in India’s banking sector. Finance Minister Nirmala Sitharaman emphasized that these amendments are designed to improve bank governance and investor protection.

Key Features of the Amendment Bill:

1. Multiple Nominations for Bank Accounts: Account holders can now designate up to four nominees per account, either simultaneously or successively. For bank lockers, nominees can be added successively. This change simplifies the inheritance process and reduces instances of unclaimed deposits.
2. Redefinition of ‘Substantial Interest’: The threshold for “substantial interest” in bank directorships has been raised from Rs 5 lakh to Rs 2 crore, updating a figure that remained unchanged for nearly six decades. This adjustment aligns financial thresholds with current economic conditions.
3. Extended Tenure for Cooperative Bank Directors: The tenure for directors in cooperative banks has been extended from 8 to 10 years, aligning with the Constitution (Ninety-Seventh Amendment) Act, 2011. Additionally, directors of Central Cooperative Banks are now permitted to serve on the boards of State Cooperative Banks, promoting leadership continuity.
4. Autonomy in Auditor Remuneration: Banks are granted greater freedom in determining remuneration for statutory auditors, a responsibility previously overseen by the Reserve Bank of India (RBI) and the Central Government. This change aims to improve audit quality in public sector banks.
5. Revised Regulatory Reporting Deadlines: The deadlines for banks’ regulatory compliance reporting have been shifted from the second and fourth Fridays to the 15th and last day of every month. This adjustment is expected to enhance compliance efficiency and align reporting practices with regulatory frameworks.
6. Transfer of Unclaimed Assets to Investor Education and Protection Fund (IEPF): The bill expands the scope of unclaimed assets transferred to the IEPF to include unclaimed dividends, shares, and interest or redemption amounts on bonds that remain unpaid or unclaimed for seven years. Individuals can claim transfers or refunds from the fund, safeguarding investors’ interests.

Benefits of the Amendments:

• Enhanced Governance: The amendments aim to strengthen governance standards within banks, ensuring better protection for depositors and investors.
• Improved Customer Convenience: Features like multiple nominations simplify processes for account holders, enhancing overall customer experience.
• Regulatory Alignment: Updating financial thresholds and reporting deadlines ensures that banking practices remain aligned with current economic realities and regulatory frameworks.