Govt set to bring in changes in banking laws
The government is expected to move two Bills in the Lok Sabha in the week starting August 5. The first Bill aims to amend banking laws and the second one is related with amending the Oilfields (Regulation and Development) Act.
Changes for banking system
Sources said the Union Cabinet in its meeting on Friday approved the introduction of ‘Banking Laws (Amendment) Bill 2024.’ Though no details have been made public as Parliament is in session, it is believed that the Bill is expected to bring alterations in various banking laws related to redefining the substantial interest for director in the number of nominees in a bank account and change in the dates of monthly reporting, among other changes.
Present provision for nominees under section 45ZA of the Banking Regulation Act says a depositor can nominate one person to whom, in the event of his death, the amount of deposit may be returned. According to sources, the new proposal is likely to raise the number of nominees to 4.
Unclaimed deposits
This change aims to reduce unclaimed deposits in banks. Data show that as on March 31, 2023, total amount under unclaimed deposits with public and private sector banks combined rose to over ₹42,000 crore from around ₹33,000 crore a year ago. Balances in savings/current accounts which are not operated for 10 years, or term deposits not claimed within 10 years from date of maturity are classified as ‘unclaimed deposits’. These amounts are transferred by banks to the Depositor Education and Awareness (DEA) Fund maintained by the Reserve Bank of India.
The depositors are, however, still entitled to claim the deposits at a later date from the bank(s) where such deposits were held along with interest, as applicable. However, despite public awareness campaigns undertaken by banks as well as RBI from time to time, the amount of unclaimed deposit is showing an increasing trend. With the provision of four nominees, the government aims to bring down that the amount under unclaimed deposit.
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Another key change proposed is related to redefining ‘substantial interest’ for directorship. Present provision under the Banking Regulation Act defines ‘substantial interest’ as “holding of a beneficial interest by an individual or his spouse or minor child, whether singly or taken together in the shares thereof, the amount paid-up on which exceeds ₹5 lakhs or 10 per cent of the paid-up capital of the company, whichever is less.”
Sources said that the proposal is to increase the limit of substantial interest of directorship to ₹2 crore or 10 per cent of paid-up capital.
According to sources, changes are also expected in the date of reporting and raising the tenure for director in a co-operative bank. Present provision says banks are to report various compliances on second and fourth Friday every month which is now being proposed to change to 15th and 30th day of the month. Also, a provision is expected to be made for restricting the tenure of director in a co-operative bank to 10 years.