LS passes Banking Laws (Amendment) Bill allowing 4 nominees in bank accounts

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The Lok Sabha on Tuesday passed the Banking Laws (Amendment) Bill, 2024, which allows bank account holders to have up to four nominees in their accounts.

Another proposed change relates to redefining ‘substantial interest’ for directorships, which could increase to ₹2 crore instead of the current limit of ₹5 lakh, which was fixed almost six decades ago.

The Bill piloted by Finance Minister Nirmala Sitharaman was approved by a voice vote.

Replying to the debate on the Bill, Sitharaman said depositors will have the option of successive or simultaneous nomination facility, while locker holders will have only successive nomination.

She also said that since 2014, the government and the RBI have been extremely cautious, so that banks remain stable.

“The intention is to keep our banks safe, stable, healthy, and after 10 years you are seeing the outcome,” Sitharaman said.

The Bill proposes to increase the tenure of directors (excluding the chairman and whole-time director) in cooperative banks from 8 years to 10 years, so as to align with the Constitution (Ninety-Seventh Amendment) Act, 2011.

Once passed, the Bill would allow a director of a Central Cooperative Bank to serve on the board of a State Cooperative Bank.

The Bill also seeks to give greater freedom to banks in deciding the remuneration to be paid to statutory auditors.

It also seeks to redefine the reporting dates for banks for regulatory compliance to the 15th and last day of every month instead of the second and fourth Fridays.

“The proposed amendments will strengthen governance in the banking sector and enhance customer convenience with respect to nomination and protection of investors,” Sitharaman said while moving the Bill for consideration and passing.